What’s up with the new name of the new trade agreement between the US, Canada and Mexico? There are a lot of things to clarify.
China should take note of the new US, Canada and Mexico trade agreement. But first things first: one of the biggest qualms that Donald Trump had with the North American Free Trade Agreement (NAFTA) was its name.
So, it’s no surprise that the revised version of the deal reached Sunday is called something else: the US-Mexico-Canada Agreement, or USMCA.
“It has a good ring to it,” Trump said at a press conference. And Trump has been repeating insanely the mantra of “America first.” Well, at least he kept his promise in the new name.
Donald Trump’s obsession with the US-China trade relationship has launched a trade war, with roughly $360 billion worth of goods sent between the two countries now subject to tariffs.
Chapter 32 of the new deal, which overhauls NAFTA, addresses the ability of members to enter into a free-trade agreement with a country that has a “non-market economy” (are you listening, China?). While many countries are considered to have non-market economies, China is the most notable member of the list.
Striking the new North American deal meant resolving disagreements between US and Canadian negotiators (those between the US and Mexico were resolved a month ago).
The Americans had wanted to get rid of “Chapter 19”, a way of settling disputes about defensive tariffs, to prize open the Canadian dairy market to American farmers and increase the “de minimis threshold”—the price below which small items can enter Canada duty-free. The Canadians wanted to retain Chapter 19 and to receive assurances that they would not be whacked by tariffs on cars or car parts.
The eventual compromise involved handing the Americans some extra market access in dairy, as well as a higher de minimis threshold. Chapter 19 survived, and the Canadians received assurances of some protection from tariffs on cars and car parts. The Trump administration’s tariffs on imports of Canadian steel and aluminum are still in place, although on October 1 the president spoke of talks to remove them.
The full impact of the new deals will not be clear immediately. The USMCA contains hundreds of pages of legalese. Companies will need time to work out how to comply with the new rules. As experts trawl through the text published late on September 30, they will no doubt discover clauses that were not widely noted in media coverage.
There is a long way to go for the new agreement. The USMCA must be ratified by each country’s congress. And awkwardly, the Trump administration has run out of time for the current US Congress to consider it.