Canada, US and Mexico's make 'historic transaction' with new trade agreement

Fredrick Soto
October 2, 2018

"Class 7 milk pricing in Canada caused problems for US manufacturers in two different ways", said Eric Meyer, the president of HighGround Dairy in Chicago. Canada had demanded protection from Trump's tariffs on imported steel and aluminum.

"Unlike the disputes with Canada, Mexico and the EU, Trump's aggression towards China has broader support", said Capital Economics' Andrew Hunter in a note to clients. Canada also successfully pushed to keep a special dispute process, called Chapter 19, intact. "They didn't want to make a deal with anybody else", he had said. But even that disapproval was relatively muted.

It said the measures will have "a dramatic impact not only for dairy farmers but for the whole sector". The province held its election on Monday, less than 24 hours after the deal was released.

"There are several sticking points", Navarro said, adding that he'd recently spoken to the negotiating team that's led by U.S. Trade Representative Robert Lighthizer.

"At the beginning of the third quarter, President Trump made a critical decision on trade policy by realizing he could not fight three trade wars at one time", research firm Strategas wrote to clients in an October 1 memo.

The new U.S. -Canada dairy rules echo what Canada had already offered under the Trans-Pacific Partnership, Martin said.

Canadian Prime Minister Justin Trudeau said the trade deal was "profoundly beneficial" to Canadians. He said he was pleased with the deal, given the circumstances and despite moments of "pessimism" along the way. Getting Congressional approval could be hard, especially if Democrats take control of the House, the officials said.

Lawmakers from both parties have urged the White House to include Canada in any revised Nafta, warning that excluding Canada, which is America's largest export market, could disrupt supply chains, cost jobs, and slow the U.S. economy.

To counter China's unfair practices, he had announced on June 15 that the U.S. would impose tariffs of 25 percent on $50 billion worth of Chinese imports.

However, the USMCA includes language that requires signatories to give notice if they plan to negotiate a free trade deal with a "non-market country", and to allow the other two signatories at least a month to review any agreement before it is signed. "There is no question, that the question of NAFTA and renegotiating NAFTA has been a challenge in conversations with the president, with the administration, over these past thirteen months", the prime minister acknowledged.

"China wants to talk, very badly".

Trump said he spoke to both leaders on Monday.

"We're not for sale as a dairy industry", he said.

Stock markets rose on news of the agreement, with the Dow Jones in NY up 1.0 percent in late morning, just shy of a record high.

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

But those principles of "fairness" and "reciprocity" can look very different depending on which workers or industries you're talking about. "The fact is that the American economy is 10 times bigger than the Canadian economy".

There was no guarantee that the trade negotiations would turn out this way.

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.

Talks continued Sunday morning amid renewed urgency to nail down the text of a new agreement by midnight, White House trade adviser Peter Navarro said.

The Canadian Chamber of Commerce said it was relieved that an agreement in principle had been reached.

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