“It’s a good day for Canada,” was all Prime Minister Justin Trudeau would say as he left a late-night cabinet meeting in Ottawa. (Canadian Press file image)

“It’s a good day for Canada,” was all Prime Minister Justin Trudeau would say as he left a late-night cabinet meeting in Ottawa. (Canadian Press file image)

Out with NAFTA, in with USMCA: Canada inks new trade deal

The new trade deal with the U.S. and Mexico came just hours before an end-of-week, midnight dealine

A new era in North American free trade dawned in the dead of night Sunday as a 14-month NAFTA modernization effort between Canada, the U.S. and Mexico finally came to fruition with just hours to spare before an end-of-weekend deadline.

What began as a marathon in the summer of 2017 ended in a flat-out sprint as negotiators in Ottawa and Washington worked around the clock to put the finishing touches on language adding Canada to the deal reached over the summer between the U.S. and Mexico.

“It’s a good day for Canada,” was all Prime Minister Justin Trudeau would say as he left a late-night cabinet meeting in Ottawa that capped several days of frenetic long-distance talks that included Foreign Affairs Minister Chrystia Freeland and U.S. Ambassador David MacNaughton.

Details remained sparse, but U.S. administration officials say the deal — newly christened the U.S.-Mexico-Canada Trade Agreement, or USMCA — provides increased access to Canada’s dairy market for U.S. producers and limits the American impact of Canada’s controversial supply management system for dairy and poultry products, long a thorn in the side of President Donald Trump.

RELATED: VIDEO – B.C. Farmers worry NAFTA deal could affect livelihoods

It also appears to preserve the key dispute-resolution provisions — Chapter 19 — which allow for independent panels to resolve disputes involving companies and governments, as well as Chapter 20, the government-to-government dispute settlement mechanism.

Canada fought hard to retain Chapter 19, a holdover from NAFTA that U.S. trade ambassador Robert Lighthizer worked tooth and nail to eliminate.

“USMCA will give our workers, farmers, ranchers, and businesses a high-standard trade agreement that will result in freer markets, fairer trade and robust economic growth in our region,” Freeland and Lighthizer said in a joint statement.

“It will strengthen the middle class, and create good, well-paying jobs and new opportunities for the nearly half billion people who call North America home.”

On the matter of Section 232 tariffs, Trump’s trade weapon of choice, U.S. officials told a late-night conference call with reporters that the two sides had “reached an accommodation” on the issue.

A side letter published along with the main text of the agreement exempts a percentage of eligible auto exports from the tariffs. A similar agreement between Mexico and the U.S. preserves duty-free access to the U.S. market for vehicles that comply with the agreement’s rules of origin.

Those rules require that a certain percentage of an imported vehicle’s components be manufactured in the United States.

Some have characterized the side letter as effectively establishing a quota on the number of autos that can be exported to the U.S. — anathema to the very principles of free trade. But Dan Ujczo, an international trade lawyer with the U.S. firm Dickinson Wright, said it would only apply to a very small percentage of vehicles that don’t comply with the origin rules.

“When people are saying there’s a cap on auto exports, it’s only in the limited situation where the goods are non-conforming with the rules of origin. So if you comply with the rules of origin, there’s no way you are subject to 232 tariffs,” Ujczo said.

“This objection is largely more philosophical than practical — the idea of having quotas as a side letter to a free trade agreement. The practical consequences are limited, if any.”

RELATED: Despite Trump deadline, NAFTA talks resume

Despite the fact that Ottawa had long pushed back hard against allowing the deal to be periodically revisited, officials in the U.S. briefing said the new language includes a provision that will indeed see the deal reviewed every six years.

“This is going to be one of the most enforceable trade agreements we’ve ever had,” one official said. “This gives us a significant new form of leverage in terms of encouraging people to come up to the mark and really fully comply with all of their obligations.

“This administration is committed to strong and effective enforcement of this agreement, just like all of our other agreements. We will be watching very carefully to see and to make sure that all of the things that have been pledged and promised in the agreement do come about.”

Insiders got wind of a breakthrough after 14 months of tumultuous talks and just hours before U.S. and Mexican trade authorities were set to publish their own trade agreement without Canada as a signatory.

Federal cabinet ministers were summoned to a late Sunday meeting at the Prime Minister’s Office near Parliament Hill, while the White House convened its own late-night trade briefing conference call just an hour before the midnight deadline.

“In short, we think this is a fantastic agreement for the U.S., but also for Canada and Mexico,” said the American officials, who cheered the fact that U.S. dairy ranchers would soon have “substantial” expanded access to lucrative markets north of the border.

They described the central elements of the deal as a “template” that would become the “playbook” for all of the Trump administration’s future trade deals, including new and stronger rules of origin on autos and mechanisms to ensure agreements don’t become ”stale and outdated.”

“It’s a great win for the president and a validation of his strategy in the area of international trade.”

In Ottawa, PMO officials said there would be another cabinet meeting Monday and a news conference likely as well.

Meantime, congratulations were being offered among key stakeholders who have been on the edge of their seats waiting to see if Canada and the United States would find common ground.

An agreement on how to treat the auto sector, reached this summer between the United States and Mexico, was central to a revamped NAFTA going ahead.

But the U.S. and Canada had trouble dealing with other areas in the pact, including Canada’s dairy industry, its insistence on a strong dispute settlement mechanism and concerns about intellectual property and culture.

The Canadian Chamber of Commerce said it was relieved that an agreement in principle had been reached. But President Perrin Beatty said the details of the text needed a closer look before a final verdict could be rendered.

“Specifically, we will seek clarity on how the agreement addresses the existing tariffs on Canadian steel and aluminium, as well as how it will ensure that tariffs and quotas upon Canada’s auto sector exports will be avoided,” Beatty said in a statement.

Trudeau has promised repeatedly to keep the country’s supply management system intact, despite pressure from Trump. The issue has also figured prominently in Quebec, where voters go to the polls in a provincial election on Monday.

The Canadian Press

Like us on Facebook and follow us on Twitter.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

The 11th annual Christmas Stocking Drive hosted by Royal LePage runs now until Dec. 11. (David Sucsy, Getty Images via Metro Creative Graphics)
Chilliwack Realtors asking people to help fill Christmas stockings for kids, seniors

Donations of cash, items needed for Christmas Stocking Drive hosted by Royal LePage

The BC Court of Appeal in Vancouver.
BC Court of Appeal hearing Barry Neufeld’s arguments why defamation suit should go ahead

BC Supreme Court tossed out lawsuit against Glen Hansman a year ago following anti-SLAPP legislation

A new ‘soft reporting’ room is opening inside the Ann Davis Transition Society offices on Dec. 1, 2020 which is thought to be the first of its kind in B.C. (Ann Davis Transitional Society/ Facebook)
First ‘trauma-informed’ reporting room of its kind in B.C. opening in Chilliwack

The ‘Willow Room’ is for reporting domestic violence, sexual, or gender-based violence to police

Trustees Barry Neufeld (left) and Darrell Furgason at a Jan. 29, 2019 meeting. (File photo/ Chilliwack Progress)
Chilliwack teachers respond to trustee’s ableist slurs

Teachers’ association calling for Neufeld to resign, board to censure Furgason

Meaghan Esmeijer delivers fully packed diaper backs to the maternity floor of Chilliwack General Hospital as part of the Southside Church ‘Love them Both’ program. (Submitted photo)
Chilliwack’s Southside Church spreads Christmas cheer with ‘All is Bright’ day

The fifth annual community outreach event happens Nov. 28 with activities throughout Chilliwack

A man wearing a face mask to help curb the spread of COVID-19 walks in downtown Vancouver, B.C., Sunday, Nov. 22, 2020. The use of masks is mandatory in indoor public and retail spaces in the province. THE CANADIAN PRESS/Darryl Dyck
B.C. records deadliest day of pandemic with 13 deaths, 738 new COVID-19 cases

Number of people in hospital is nearing 300, while total cases near 30,000

(File photo)
Alberta woman charged after allegedly hitting boy with watermelon at Okanagan campsite

Police say a disagreement among friends at an Adams Lake campsite turned ugly

Court of Appeal for British Columbia in Vancouver. (File photo: Tom Zytaruk)
B.C. woman loses appeal to have second child by using late husband’s sperm

Assisted Human Reproduction Act prohibits the removal of human reproductive material from a donor without consent

B.C. projects targeting the restoration of sockeye salmon stocks in the Fraser and Columbia Watersheds will share in $10.9 million of federal funding to protect species at risk. (Kenny Regan photo)
13 projects protecting B.C. aquatic species at risk receive $11 million in federal funding

Salmon and marine mammals expected to benefit from ecosystem-based approach

Join Black Press Media and Do Some Good
Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

File photo
Surrey RCMP investigating death threat against Surrey councillor

‘On Monday morning I received a threat on messenger that basically said to put a bullet in me,’ Councillor Jack Hundial told the Now-Leader

Krista Macinnis displays the homework assignment that her Grade 6 daughter received on Tuesday. (Submitted photo)
B.C. mom angry that students asked to list positive stories about residential schools

Daughter’s Grade 6 class asked to write down 5 positive stories or facts

Barrels pictured outside Oliver winery, Quinta Ferreira, in May. (Phil McLachlan - Black Press Media)
B.C. Master of Wine reflects on industry’s teetering economic state

Pandemic, for some wine makers, has been a blessing in disguise. For others, not so much.

Most Read