New US-Canada-Mexico trade deal to replace NAFTA

The US, Canada and Mexico have reached a deal to revamp the North American Free Trade Agreement (NAFTA), ending months of negotiations between the three nations.

The new trade agreement will be called the the United States-Mexico-Canada Agreement (USMCA), and will become the world’s second-biggest economic bloc behind the European Union, as reported by The Guardian.

The US had reached an earlier bilateral agreement with Mexico, with potential to exclude Canada from Nafta, with Trump setting a deadline of Sunday to get Canada to agree to a deal.

Announcing the agreement at the 11th-hour on Sunday, US President Donald Trump declared it a “wonderful new trade deal” that was “truly historic news for our nation and the world”.

He tweeted: “It is a great deal for all three countries, solves the many deficiencies and mistakes in Nafta, greatly opens markets to our farmers and manufacturers, reduces trade barriers to the US and will bring all three great nations together in competition with the rest of the world.”

It ends months of disagreement, after Trump labelled the 1994 agreement – a zero-tariff pact between the US, Canada and Mexico – the “worst trade deal ever made” as part of his pitch to become president, and swiftly announced plans to overhaul the agreement upon taking office. 

His plans to revamp NAFTA were released in July,  proposing a modernisation of the agreement, rather than a complete restructure.

“The new NAFTA must continue to break down barriers to American exports,” The Office of the US Trade Representative said in a report detailing its plans for the 23-year-old agreement at the time.

“This includes the elimination of unfair subsidies, market-distorting practices by state owned enterprises, and burdensome restrictions of intellectual property. The new NAFTA will be modernized to reflect 21st century standards and will reflect a fairer deal, addressing America’s persistent trade imbalances in North America.”

“SIGNIFICANT ACCOMPLISHMENT”

California’s Wine Institute CEO, Robert P. “Bobby” Koch, has welcomed the deal.

“This agreement represents real progress towards improved market access for US. wines in Canada. In settling the US WTO case, Canada has finally acknowledged that it must live up to its WTO obligations and that blatantly discriminatory policies cannot be tolerated. We still have much work to do in other areas of market access, but this is a significant accomplishment.”

“The inclusion of the alcohol annex is also a very positive step in our long-standing efforts to remove trade barriers and grow US wine exports. We thank Ambassador Lighthizer and his entire team for their tireless efforts to secure these gains.”

While the deal will ensure that wine and spirits can be traded freely between the three countries, the biggest visible impact will be to how wine is sold in Canada, which has agreed to resolve the ongoing dispute regarding grocery store access in British Columbia.

Currently, local wines can be sold in grocery shops but imported wine must be sold in a “store within a store”, separate and often obscured from the main wine aisle. The deal ensures that the discriminatory policies will be removed by November 1st of next year.

The revamped deal will govern more than $1 trillion worth of trade between the three countries, but must still win approval from the US Congress, which is unlikely to happen until next year.

While NAFTA had an indefinite lifespan, USMCA will expire after 16 years, with Mexico City, Ottawa, and Washington set to conduct a joint review six years after the deal enters into force, to re-approve it beyond this term.

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