Canada signs onto new NAFTA despite the persistence of steel and aluminum tariffs

U.S.’s punitive tariffs on steel and aluminum from other countries remain in place, along with stiff countermeasures from Canada and Mexico

Signing on to a revamped NAFTA alleviates the serious economic uncertainty that lingered throughout the negotiating process, Prime Minister Justin Trudeau said Friday while flanked by U.S. President Donald Trump and outgoing Mexican President Enrique Pena Nieto at a highly-anticipated formalizing of the trade pact in Buenos Aires.

Uncertainty would have only worsened and caused additional economic damage had the deal not been reached, Trudeau added.

“The new North American free trade agreement maintains stability for Canada’s entire economy, stability that’s essential for the millions of jobs and middle class families across the country,” he said. “That’s why I’m here today.”

The signing ceremony at a packed hotel in Buenos Aires on the sidelines of the G20 summit did not come without a fight.

The U.S.’s punitive tariffs on steel and aluminum from other countries remain in place, along with stiff countermeasures from Canada and Mexico. As negotiations to remove those tariffs dragged on in the past few weeks, Canadian officials and emissaries insisted Canada would not take part in a fanfare-filled signing affair until the levies were lifted.

All that changed this week, said one insider: “At the end of the day, removing the uncertainty from the rest of the economy is too important to pass up.”

During his remarks, Trudeau made a point of nudging Trump to remove the tariffs.

“There’s much more work to do in lowering trade barriers and in fostering growth that benefits everyone,” Trudeau said.

“As a result, the tariff-free access NAFTA guaranteed for more than 70 per cent of Canada’s total exports is secure. That’s essential for businesses, families, jobs, entrepreneurs, and hardworking people in every corner of our country. “

Trudeau raised the tariff issue before the three leaders emerged together for the signing ceremony, said officials in the Prime Minister’s Office.

A Canadian official also said earlier Friday that the big advantage of signing onto the agreement now is a side letter on the auto industry exempting Canada of potential tariffs on exports of up to 2.6 million vehicles — well above current levels.

At the beginning of his remarks, Trump also acknowledged the process to negotiate the United States-Mexico-Canada agreement has been “a battle.”

“Battles sometimes make great friendships, so it is really terrific,” Trump said.

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Friday marked an important deadline for the trade pact because a new Mexican president takes over Saturday who might not honour the tentative deal struck by his predecessor.

Trump acknowledged that Friday was Pena Nieto’s last day in office and congratulated him on the achievement of signing on to the deal.

The signing of the three-way trade pact is largely ceremonial because it still needs to be ratified by all three countries before it can formally take effect.

U.S. lawmakers have already indicated they don’t expect to tackle the USMCA — or CUSMA, as Ottawa now calls it — until after the new Congress is sworn in early next year.

The deal — 32 chapters, 11 annexes and 12 side letters — sets new rules for the auto sector, including a higher threshold for North American content and rules requiring 40 per cent of car parts be made by workers paid at least $16 an hour.

It preserves a contentious dispute-resolution system the U.S. dearly wanted gone, extends patent protections for biologic drugs and allows U.S. farmers a 3.6-per-cent share of Canada’s famously guarded market for poultry, eggs and dairy products — a concession that dismayed Canadian dairy producers.

Earlier this month, a coalition of no fewer than 40 Republicans in Congress wrote to Trump urging him not to sign the agreement, expressing disdain for “inappropriate” and “insulting” language that commits the three countries to supporting and protecting sexual orientation and gender identity rights.

Separately, a smaller group of Republican senators even tried to convince the White House to hit the gas pedal on ratification efforts, fearful that the new influx of Democrats in the new year would render congressional approval of the deal “significantly more difficult.”

And just this week, Democrats whose regions were hit hard by deep job and production cuts at General Motors took their frustrations out on an agreement they thought was supposed to foster North American growth in the auto sector.

“If we’re going to see more plants going to Mexico, I’m not going to support NAFTA 2.0,” said Michigan Rep. Debbie Dingell. “These are peoples’ lives; these are people who work in my district and I’m working hard to keep those jobs here.”

– With files from James McCarten in Washington

Kristy Kirkup, The Canadian Press

 

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