Published: Sat, October 06, 2018
Money | By Armando Alvarado

United States reaches new deal to replace NAFTA

United States reaches new deal to replace NAFTA

The Trump administration has muscled Canada into joining a revamped North American trade deal, sealed a pact with South Korea and coaxed a reluctant Japan into agreeing to one-on-one trade talks. The United States had forged a separate trade deal with Mexico, the third member of NAFTA, in August.

Hours before the midnight deadline, the two countries agreed to a renewed trilateral agreement between the United States, Mexico, and Canada, which is now dubbed "USMCA" - the US-Mexico-Canada Agreement.

For we already knew that US President Donald Trump knows nothing about the actual details of America's trade agreements, and cares even less.

Mr Trump said the deal was a victory for farmers, vehicle workers and the United States manufacturing industry: "It means far more American jobs, and these are high-quality jobs".

In addition to the USMCA, Trump also credited the threat of auto tariffs for the European Union's willingness to negotiate a new trade agreement.

"This is a bad outcome for dairy farmers and the whole dairy sector", said the Dairy Farmers of Canada in a statement Monday.

Praise from the lobbying group representing Ford Motor Co., General Motors and Fiat Chrysler was measured.

Canadian Prime Minister Justin Trudeau said Monday that his country was in a more stable place now that it had completed the negotiations.

"The most important gain from this agreement is retaining our access to the US market and Canadians understand that", Freeland said.

While that provision was an irritant for Lighthizer from the outset of negotiations, Freeland said her US counterpart "has come to appreciate its value for Canada and the value it brought to the larger trading relationship".

To be sure, Trudeau will have to explain why the completion of the USMCA late on September 30 was a "good day for Canada".

United States farmers will gain access to 3.5% of Canada's dairy market worth $16bn a year, while another requirement stipulates that 40% of components for vehicles produced in the USMCA area must be made in areas paying wages of $16 an hour.

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According to the American Petroleum Institute (API), USMCA continues market access for natural gas and oil products produced in the United States with zero tariffs.

The new deal was "terrific" for all three countries, he added.

Reports of a deal caused a jump in the Canadian dollar on early Asian trading with the loonie up 0.7 percent from its Friday close at $1.2814.

The terms reached between the US and Mexico on higher wage thresholds will also be positive for Canadian producers, said Unifor president Jerry Dias, who welcomed the deal.

The head of the International Monetary Fund, Christine Lagarde, issued a new warning on Monday that rising tariffs were dimming the global growth outlook. US Trade Representative Robert Lighthizer did clarify that talks on the tariffs were ongoing.

"Nothing but good news here for the US dairy industry".

It replaces the 24-year-old North American Free Trade Agreement, of NAFTA, which President Donald Trump had called a job-killing disaster.

"NAFTA 2 will give certainty and stability to Mexican trade with its partners in North America". During his first trip to that country in 2016, Trudeau launched exploratory free trade talks.

"Everyone is trying to entrench themselves in their region to compete with other regions", Guajardo told Mexican radio.

Trump said he would continue steel and aluminum tariffs on Mexico and Canada "until such time as we can do something different", adding that might include quotas, "so that our industry is protected".

One surprise area where there has been no change is that USA tariffs on Canadian and Mexican steel and aluminium will remain for now, even though this was seen as a key barrier to a deal.

The rhetoric between them ratcheted up throughout June, with Trump taking aim at Canadian tariffs on dairy that he said were "killing" American agriculture.

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