(VOVWORLD) - The United States, Mexico, and Canada have reached a trilateral trade deal called USMCA to replace the 1994 North American Free Trade Agreement (NAFTA). The 3 participating countries said in a joint statement that USMCA is a new, modernized trade agreement for the 21st century.
 US President Donald Trump and Canadian Prime Minister Justin Trudeau on the sidelines of the G7 Summit (Photo: AFP/VNA) |
The United States-Mexico-Canada Agreement was struck after 13 months of negotiations and viewed as a win-win deal.
Parties’ concessions
A joint statement by United States Trade Representative Robert Lighthizer and Canadian Foreign Affairs Minister Chrystia Freeland said: “the USMCA will give our workers, farmers, ranchers, and businesses a high-standard trade agreement that will result in freer markets, fairer trade and robust economic growth in our region. It will strengthen the middle class, and create good, well-paying jobs and new opportunities for the nearly half billion people who call North America home.”
North America’s annual trade revenue totals 1 trillion USD.
The new agreement addresses issues like criminal penalties for violations of copyrights of online movies, books, software, music, and games. It includes stronger protections for patents in biology and financial services.
The USMCA benefits the US by opening Canada’s dairy market to US farmers, the thorniest issue negotiated by Washington and Ottawa. NAFTA has allowed Canada to restrict milk, cheese, and other dairy product imports from the US. Critics say the USMCA will hurt Canadian dairy, poultry and egg farmers and producers, restrict Canadians' access to locally produced food, and put food safety at risk. Canada has agreed to end its system of dairy price controls, enabling greater penetration by US dairy products.
Mexico had to make several concessions to the US in exchange for a 16-year sunset clause. The original US proposal called for a five-year sunset clause.
New trade barriers?
Many Americans are worried that the USMCA will hurt US steel manufacturing. New regulations on car origins may create more manufacturing jobs in the US, but will increase car prices. The Trump administration argues that additional taxation may restrict automobile imports from Canada and Mexico to some extent. But it will not make a difference in the short term because new tariffs will not be imposed until the US Commerce Department completes its assessment of national security issues.
The steel industries of Mexico and Canada have called on their governments to settle disputes with the US before the USMCA is signed.
US, Mexican, and Canadian leaders have said they are pleased with the new deal, calling it a lifebuoy for North American trade.