Canadian Dairy Farmers Aren't Happy With U.S. Trade Deal. Here's Why

Hugh Fox
October 2, 2018

Mexico's Foreign Minister Luis Videgaray (C), Mexico's Economy Minister Ildefonso Guajardo (3rdR), White House chief economic adviser Larry Kudlow (3rdR-standing) and Jesus Seade (R), Mexico's President-elect Obrador's representative in trade negotiations look on as U.S. President Donald Trump (L) announces a deal to replace the North American Free Trade Agreement (NAFTA) at the White House in Washington, Aug. 27, 2018.

Nonetheless, Canada managed to salvage its red-line or walk-away demand, a rejigging of the conflict resolution clause that effectively keeps it in play, and pushing the review of the newly-minted deal to more than six years down the road when Trump will no longer be president and therefore bully-boy-in-chief, even if re-elected in November, 2020. And most disappointingly, US tariffs on steel and aluminum stay in place.

He said the deal will terminate NAFTA, which he criticized as one of the worst trade deals ever made.

As per the US USMCA fact sheet, this deal encourages manufacturing and regional economic growth by requiring that 75% of auto content be made in North America.

The deal is a reworking of the 1994 North American Free Trade Agreement (Nafta), which underpins $1.2 trillion in trade between the three countries.

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"This is a truly extraordinary agreement for the US, Canada and Mexico".

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Among the biggest changes: U.S. dairy farmers get wider access to Canada's dairy market; intellectual property gets tighter across-the-board protection and more of the autos sold in North America will be made in North America.

Now that a deal has been reached, Laycraft said Canada should be focusing on other trade objectives, like expanding into China, Europe and possibly the United Kingdom post-Brexit.

The new agreement is called the USMCA. The deal must also be approved by each country's legislature before it can come into force. "The door closes on trade fragmentation in the region", Jesus Seade, trade negotiator for Mexico's incoming president, said via Twitter.

USMCA is said by analysts to be similar to NAFTA in many respects but there is improved access for USA agricultural goods, including the dairy products which Canada in particular had tried to limit.

"As I say, the United States is respected again", he told the press conference. In the aftermath of a disastrous G-7 summit in Quebec in June, Trump called Prime Minister Justin Trudeau "weak" and "dishonest".

Insiders got wind of a breakthrough just hours before US and Mexican trade authorities were set to publish their own trade agreement without Canada as a signatory.

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"The agreement will govern almost $1.2 trillion in trade, which makes it the biggest trade deal in United States history", Trump said.

With the new deal, Canada will increase market access for US dairy, poultry, and eggs. It also won a provision setting tariff-free entry of cars and automotive parts above current levels, which will make it harder for any US government to hold this country's automotive sector hostage in the future. "To me, it's the most important word in trade".

"It does mean that there is going to be more supply in Canada, and in theory, that could mean better retail prices on dairy products such as cheese and milk."

The United States and Mexico had already clinched a bilateral agreement in August. And the so-called "proportionality rule", which required Canada to maintain its proportion of energy exports to the USA, is also gone.

Ruiter said he had heard similar promises of support after the TPP and European deals were signed, but has never seen any compensation himself.

"It removes that uncertainty that was hanging over the sector, in terms of our access to this North American market, in terms of the rules related to our integrated North American supply chain".

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