USMCA Is The New NAFTA
Key actors:
Donald Trump – President of the USA
Justin Trudeau – Prime Minister of Canada
Enrique Peña Nieto – President of Mexico
The Long-Awaited Results:
President Trump’s negative opinion on NAFTA has never been a secret. He even made it a campaign promise to scrap the deal when he came into office. However, he chose to opened renegotiations instead. Representatives from Canada, the US, and Mexico have been trying to make a deal that satisfies all sides. Shortly before the final deadline for negotiations expired, they finally agreed on the United States Mexico Canada Agreement – USMCA for short.
What’s The (New) Deal?
The new deal was heralded by the respective leaders of each country as a win as a win for their country, Mr. Trump gave some especially strong praise. But despite all the praise for this “great new deal,”, the USMCA isn’t really new or great for the three countries involved. The USMCA in reality just updated many of the old terms from NAFTA with minor adjustments. For instance, cars to be sold in North America tariff free must now be at least 75% produced in North America, 42% to 45% of all car parts in cars sold in North America must be produced with wages above $16.00 an hour, and Canada must open 3.6% to 3.9% of its dairy supply managed market to American dairy products. There are now also regulations on online trading now, as well as extensions to how long an exclusive patent may be held before generic versions may be produced by competitors. Lastly there is a “Sunset Clause” in the agreement that sets all terms to expire in 16 years, and are brought up for renegotiation every 6 years. None of the terms in the new agreement are projected to have an impact on the economic growth or job rates in any of the countries involved.
The Downsides
The USMCA poses many potential problems. How will Mexico possibly enforce the labour laws necessary to have 45% of each car produced at over $16.00 an hour? Why did the Canadian government back down and let the US have a piece of their prized dairy industry? Was it worth it for the US to take a chunk out of the Canadian dairy industry at the price of other concessions when this doesn’t even come close to covering the loss American dairy farmers are taking as a result of Canadian tariffs? Why was the sunset clause included? And to top it all off, were the arduous renegotiations and dips investment as a result of the uncertainty they caused even worth the end result?
Enrique Peña Nieto, Donald Trump, and Justin Trudeau each are trying to sell this deal to their countries before they sign it. It seems as though the deal is quite unpopular in all three countries. There is no doubt in the minds of political commentators that the deal will be signed by all three leaders as the absence of a deal would significantly harm each country. These recent events are also expected to leave a bad taste in the mouth of the voting populace in all three countries. With so many questions still remaining, only time will tell how this deal will really affect North America.
Bibliography:
Canada – Brinkley, John. “USMCA Is Not The Magnificent Trade Deal Trump Says It Is.” Forbes, Forbes Magazine, 8 Oct. 2018, www.forbes.com/sites/johnbrinkley/2018/10/08/usmca-is-not-the-magnificent-trade-deal-trump-says-it-is/#2972253d4054.
Kirby, Jen. “USMCA, Trump’s New NAFTA Deal, Explained in 500 Words.” Vox, Vox, 3 Oct. 2018, www.vox.com/2018/10/3/17930092/usmca-nafta-trump-trade-deal-explained.
“’Our Government Sold Us out’: Critics at Ontario Agricultural Fair Fearful of USMCA | CBC News.” CBCnews, CBC/Radio Canada, 7 Oct. 2018, www.cbc.ca/news/canada/hamilton/ontario-dairy-farmers-usmca-1.4853756.
“USMCA Makes for an Awkward Trilateral Relationship.” The Globe and Mail, The Globe and Mail, 7 Oct. 2018, www.theglobeandmail.com/politics/article-usmca-makes-for-an-awkward-trilateral-relationship/.