No major shocks in new North American trade pact, expert says

新华社| 2018-10-02 06:20:41|Editor: Mu Xuequan
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by: Evan Duggan

VANCOUVER, Oct. 1 (Xinhua) -- After years of calling the North American Free Trade Agreement (NAFTA) the "single worst deal ever approved," U.S. President Donald Trump and his administration reached a deal to entrench NAFTA under a new name with marginal adjustments.

On Monday, the leaders of Canada, Mexico and the U.S. announced a deal in principle called the United States-Mexico-Canada Agreement (USMCA). The tri-lateral trade pact will replace and modernize the 24-year-old NAFTA.

Following more than a year of tense and often cantankerous negotiations, the three countries reached understandings in key areas, including rules of origin for automotive manufacturing, agriculture, labor, intellectual property rights, culture, and dispute settlement.

Canada lauded the deal at home for ensuring that no U.S. tariffs would impact Canadian auto and auto parts exports.

Many elements of the original NAFTA were preserved and the deal doesn't have many big shocks, said John Ries, an international trade expert at the University of British Columbia in Vancouver - home to Canada's largest port.

"A lot of the important issues were laid out in the [U.S.' s earlier] agreement with Mexico," he told Xinhua in an interview.

He said one of the more significant elements of the deal from a Canadian perspective is the inclusion of 75 percent local content in the auto sector, which also guarantees that a certain number of vehicles must be built in high-wage factories.

"That's a pretty big change for the auto companies and very much... hurts Mexico and helps the U.S. and Canada," he said.

He said the deal will keep auto production alive in the Canadian and U.S. manufacturing hubs will likely keep prices high for consumers.

Another sticking point had been Canada's supply-managed dairy industry, which has been mostly protected from U.S. products via production quotas and tariff program.

The U.S. had routinely said they wanted the Canadian supply management system dismantled.

In the new deal, American dairy producers will get access to only 3.6 percent of the Canadian market.

"It was pretty obvious that we would have to give a bit on [dairy], and we actually gave on it in the original Trans Pacific Partnership (TPP)," Ries said, referring to the 12-nation free trade pact that includes Japan, Vietnam, Canada and other Pacific nations. Trump withdrew the U.S. from the TPP last year.

Chapter 19, the main dispute settlement process in NAFTA, was kept intact, but drafted under a different chapter. Ries said the Canadian negotiators had been insistent on that point.

In Washington, President Trump said he plans to sign the new trade deal by the end of November.

"It's my great honor to announce that we have successfully completed negotiations on a brand-new deal to terminate and replace NAFTA... with an incredible new U.S.-Mexico-Canada agreement called USMCA," Trump said at the White House.

"I plan to sign the agreement by the end of November. I then will submit it for approval to Congress, where, in theory, there should be no trouble," he said.

U.S. and Canadian negotiators made the final push this weekend to reach an agreement before a midnight Sunday deadline, allowing leaders from the three countries to sign the new trade pact by late November.

Canadian Prime Minister Justin Trudeau on Monday called the deal good for Canada's middle class.

"The agreement-in-principle we reached today is good for Canada, good for Canadian businesses, and most importantly, good for Canadian workers and their families," he said in a statement. "When this improved agreement is implemented, North American trade will be preserved and modernized for the 21st century - just as we set out to do."

The U.S. administration said Monday, however, that it would keep in place tariffs against Canadian steel and aluminum imports, one of the key weapons the Trump administration used as leverage during the negotiations that took more than a year.

"That kind of surprises me," Ries said. "I don' t think it would hold up to scrutiny that they' re necessary for U.S. national security. That is being challenged in the WTO."

As for the name change from NAFTA, Ries said it probably has mostly to do with Trump's ego.

"It just seems to be a thing Trump had about hating NAFTA, and the association of NAFTA being the worst trade deal the U.S. has ever made," he said. "I think it was just a Trump vanity thing that he wanted to give it his own name."

The U.S. and Mexico are, respectively, Canada's first-and third-largest merchandise trading partners in the world, while Canada is respectively the second-and fifth-largest merchandise trading partner of the U.S. and Mexico - and the largest export market for the U.S.

Last year, trilateral trade between the countries reached nearly 1.1 trillion USD, more than a three-fold increase since 1993, according to Canadian government figures provided to the media.