The US has reached a last-minute agreement with Canada to save NAFTA. The deal was agreed on before midnight on Sunday while sharp divisions between the two countries threatened to undermine the trade treaty that has stood for 25 years. Tense talks have been going on between the US, Canada and Mexico over the last year. Canada and the US have also had to face strained relations in recent months.
The White House had set a midnight deadline on Sunday for a deal to be on the table and it seems after frantic talks that finally a breakthrough was realized. A joint statement released after the negotiations expressed a measure of satisfaction from every party. The statement read in part that the agreement will indeed help strengthen the free markets in these three countries and contribute to increased jobs and economic growth for each party.
The new deal will also lose the name NAFTA. Once ratified, the agreement will be known as the United States – Mexico – Canada agreement. The agreement is seen by many political analysts as a win for President Donald Trump. Since he took office, Trump has derided NAFTA claiming that it has been for the last two decades a raw deal for the US. At one point Trump threatened to pull the US out of the agreement despite protests from Canada and Mexico.
The combative approach to trade taken by the White House has threatened to damage diplomatic relations between the US and its traditional allies but even then, the President has held out for a better outcome that favors America. It’s not clear whether the new agreement will address some of the trade challenges that the White House has raised. However, it seems that so far everybody is happy. In a tweet sent moments after news of the agreement broke, Trump said that the renegotiated trade treaty will indeed be great for all the three countries.
The agreement with Canada comes just a few weeks after the Trump administration managed to renegotiate terms with Mexico. The US had even threatened it will move forward with the Mexican deal if there was no agreement with Canada. The deal brings in a number of new provisions too. For instance, Canada has agreed to open up its dairy market to US farmers. This will facilitate increased US dairy exports into Canada.
The deal is also proposing new rules on auto manufacturing. Cars that are made in North America will enjoy special zero tariffs. However, the cars will also need to be manufactured in a factory with an average wage of $16 an hour but the steel and aluminum tariffs imposed by the White House will remain in place. The US is expected to open negotiations with Canada and Mexico to try to see if the issue can be resolved in the future. However, in case the Trump administration decides to proceed with automobile tariffs as it has planned, the three countries will be exempted. The only thing that remains now is the ratification of this agreement. Reports indicate that the process could be done very soon.