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United States and Canada reach last-minute agreement on trade deal to replace Nafta

01 October, 2018, 11:39 | Author: Sara Gill
  • Chip Somodevilla  Getty Images North America

Canada and the United States have reached a last-minute free trade deal to revamp the long-standing NAFTA pact between the two countries and Mexico.

Canada and the US reached a tentative NAFTA deal Sunday that one source briefed on talks said would give American farmers major new access to the dairy market here, but preserve the dispute-resolution system the United States wanted to scrap.

The Trump administration struck a deal with Mexico last month to rewrite Nafta and had threatened to jettison Canada from the pact if it did not agree to concessions like opening its dairy market to American farmers.

The breakthrough came on Sunday evening as the negotiating parties agreed on key elements of the revised trade agreement, the Canadian Broadcasting Corporation reported, citing a senior source with direct knowledge of the talks. Canada also wanted to keep a NAFTA dispute-resolution process that the US wanted to jettison.

One solution might be to imitate the provisions of the bilateral Mexico-U.S. deal on NAFTA.

After weeks of hunkering down in Washington, Freeland and David MacNaughton, Canada's ambassador to the US, had spent the day in Ottawa taking part in an aggressive, long-distance, last-minute push to get Canada into the trilateral free trade deal ahead of a key congressional deadline.

Key U.S. lawmakers have called for the three-nation format to continue, meaning Congress may delay a new agreement that doesn't include its northern neighbour. Canada, in turn, is said to have agreed to put a cap on its automobile exports to the US. "The ruination of the country", he said, going on to call NAFTA "the worst trade deal ever".

Among the tough issues that needed to be hashed out between Ottawa and Washington were access to Canada's dairy sector, tariffs and a dispute resolution mechanism that the U.S. wanted to scrap.

Both Ujczo and Hassan Yussuff, the head of the Canadian Labour Congress and a member of the federal government's NAFTA advisory council who was also briefed on the talks Sunday, say the question of how to deal with the 232 tariffs remains the central issue.


The new agreement will be called the United-States-Mexico-Canada Agreement (USMC).

"It will strengthen the middle class, and create good, well-paying jobs and new opportunities for the almost half billion people who call North America home", the two countries' joint statement said.

After months of sputtering talks, momentum picked up this weekend as Trudeau inserted himself and made clear that he wanted to get something done.

The two deals will pave the way for a full overhaul of the 25-year-old NAFTA deal.

Current Mexican President Enrique Peña Nieto leaves office November 30 and therefore, the clock was ticking to get the deal done.

The original North America deal took years to negotiate and commerce between the U.S., Mexico and Canada has relied on the continuation of a trade accord, Falk added.

The access level is reportedly identical to what Canada agreed to give up as part of the Trans-Pacific Partnership (TPP), out of which Trump pulled the U.S. early in his tenure.

The pact also requires that vehicle manufacturers source at least 70 percent of their steel and aluminum from within the three countries. They suspected that Canada, which had said it wasn't bound by USA deadlines, was delaying the talks until after provincial elections Monday in Quebec, where support for Canadian dairy tariffs runs high.

Canada, the US' second largest trade partner, was excluded from a revamped NAFTA deal separately negotiated between Mexico and the USA in August after nearly a year of negotiations. The new deal likely won't be voted on by the U.S. Congress until 2019.

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