Canada trade deal may mean higher car prices

Fredrick Soto
October 4, 2018

Federal Conservatives say the new North American trade deal holds a poison pill that will make future trade deals more hard for Canada to negotiate.

Ms. Freeland called the USMCA "a good deal" that preserves the stability of the auto industry and maintains key NAFTA components such as the Chapter 19 dispute-resolution mechanism.

But Canada has been obliged to make concessions, in particular allowing U.S. dairy farmers access to about 3.5 percent of its $16 billion (13.8€ billion) domestic market. In its place is the United States-Mexico-Canada Agreement (USMCA).

Canada also agreed to a quota of 2.6m vehicles exported to the United States in the event that Trump imposed 25% global autos tariffs on national security grounds, a side letter to the agreement showed.

But she also notes that the prices that dairy farmers get on their products is due to a range of factors, including the fact that there has been a decline in fluid milk consumption by US consumers.

Dan Ujczo, a trade lawyer with Dickinson Wright, tells the Post, "the heavy lift is going to be getting a trade deal through the next Congress in 2019 as well as ratification by Mexico's new Congress and in Canada during federal election year". President Donald Trump says this will result in more vehicles and auto parts being made domestically.

Canada is also reported to have secured some protections for automobile industry against potential United States tariffs.

He said Canada did not simply accept "any deal".

"Without tariffs we wouldn't be talking about a deal", he said.

President Donald Trump gestures as he announces a revamped North American free trade deal.

Canada had opposed USA demands to weaken or eliminate NAFTA'S dispute resolution mechanism, whose arbitration panels Ottawa used to resolve trade conflicts, and to defend against United States anti-dumping and countervailing duties, notably against its important lumber industry.

"The economic ties between the three countries are a major contributor to each country's financial success, and no state benefits more from the NAFTA relationship than Texas".

According to the WCIT, exports from Washington into Mexico have increased 700 percent and exports to Canada grew to 200 percent since NAFTA was implemented in 1994.

The clause stipulates that the other two nations in the pact have the option of pulling out of the deal if any one of them signs a free trade deal with a "non-market" country.

Most news reports say the issues that are outstanding can be breached and there is an optimistic tone, so there could be an opportunity to buy the Canadian dollar if liquidity is ample and if it hasn't moved to far.

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