Finance

Canada and Mexico agree to new NAFTA terms

Canadian Prime Minister Justin Trudeau speaks during a press conference at U.N. headquarters, Wednesday, Sept. 26, 2018/ (AP Photo/Andres Kudacki)

After extended negotiations, Canada, the United States, and Mexico have all agreed to a new trade deal that will replace the North American Free Trade Agreement (NAFTA). The new agreement, which is called the United States-Mexico-Canada Agreement (USMCA) is being hailed as a win for all three countries. According to Reuters, the new deal ensures the survival of the “open-trade zone” across the continent, which is worth an estimated $1.2 trillion.

“Late last night, our deadline, we reached a wonderful new Trade Deal with Canada, to be added into the deal already reached with Mexico,” President Trump said on Monday night via Twitter.

“The new name will be The United States Mexico Canada Agreement, or USMCA. It is a great deal for all three countries, solves the many deficiencies and mistakes in NAFTA, greatly opens markets to our Farmers and Manufacturers, reduce Trade Barriers to the U.S. and will bring all three Great Nations closer together in competition with the rest of the world. The USMCA is a historic transaction!”

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After extended negotiations, Canada, the United States, and Mexico have all agreed to a new trade deal that will replace the North American Free Trade Agreement (NAFTA). The new agreement, which is called the United States-Mexico-Canada Agreement (USMCA) is being hailed as a win for all three countries. According to Reuters, the new deal ensures the survival of the “open-trade zone” across the continent, which is worth an estimated $1.2 trillion.

“Late last night, our deadline, we reached a wonderful new Trade Deal with Canada, to be added into the deal already reached with Mexico,” President Trump said on Monday night via Twitter.

“The new name will be The United States Mexico Canada Agreement, or USMCA. It is a great deal for all three countries, solves the many deficiencies and mistakes in NAFTA, greatly opens markets to our Farmers and Manufacturers, reduce Trade Barriers to the U.S. and will bring all three Great Nations closer together in competition with the rest of the world. The USMCA is a historic transaction!”

According to Reuters, the United States stands to gain more jobs, especially in manufacturing, as well as allowing some industries more access to foreign markets. The U.S. dairy industry, in particular, won a significant concession that allows farmers to sell their product in Canada, something which was restricted under NAFTA.

Canadian dairy farmers have voiced protests over the new deal, as they fear they will see a loss in profits as U.S. dairy floods across the border. According to Reuters, Quebec’s provincial government may be examining options to stop the deal.

“We had to make compromises, and some were more difficult than others,” said Canadian Prime Minister Justin Trudeau, according to Reuters.

Trudeau also explained that the Canadian government would be providing compensation to dairy farmers who were hurt by the deal.

“We never believed that it would be easy, and it wasn’t, but today is a good day for Canada,” Trudeau said.

Despite giving up its dairy markets, Canada still walked away from the talks with a victory. According to Reuters, a trade dispute resolution stipulation was included in the USMCA. This will allow Canada to protect some of its industries, namely lumber, from being subjected to U.S. tariffs in the future.

In addition to the immediate benefits affecting North America, the deal also alleviates some of the uncertainty that has been looming over financial markets for some time. As the USMCA is signed, many experts believe the White House will turn its full attention back to the ongoing trade disputes with Beijing.

According to Business Insider, the USMCA may have a provision that is a jab at China. The new rule mandates that before any of the signatory countries sign a trade agreement with a state outside of North America, the other USMCA members must be informed. The announcement must be made three months in advance, and could serve as a mechanism for the U.S. to pressure Canada and Mexico to avoid trade with China.

About Joseph LaFave View All Posts

Joseph LaFave writes about finance, maritime issues, healthcare, the National Guard, and conflicts around the world. Before becoming a journalist, he worked as an EMT in Florida and as an ESH engineer for Lockheed Martin supporting several DoD and NASA satellites. He holds a Bachelor of Science degree from Florida State University and a Master of Science in Management from Southern New Hampshire University.

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