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Canada and the U.S. announce new free trade agreement

After 13 months of negotiation, Canada and the U.S. have agreed on an updated North American free trade agreement that offers significant benefits for both countries. Canadian Prime Minister Justin Trudeau said it is “a good day for Canada,” while a trade representative for the U.S. said the new agreement is a “big win” for U.S. President Donald Trump.

Details have not been released, but it is clear the new deal, called the United States-Mexico-Canada Agreement, or USMCA, will have an impact on dozens of industries and the customers who buy products ranging from medicine to milk.

The U.S. accepted two provisions it had previously said it would not accept: the “Chapter 19” dispute-resolution system and the cultural exemption, both of which were called “red lines” by Trudeau. Canada, in turn, agreed to give U.S. farmers more access to the protected Canadian market. It also accepted new provisions related to:

  • “review and termination” of the agreement
  • investor-state dispute settlement
  • copyright protection of intellectual property
  • duties on U.S. products purchased online by Canadians

Trump has agreed that no hard limit will be placed on Canadian auto exports to the U.S., though if the U.S. moves forward with the imposition of worldwide Section 232 tariffs on autos, those would also apply to Canada. However, what Ottawa has negotiated is effectively an exemption, because it would still be able to export cars and parts tariff-free up to a certain amount well above what Canada currently sends south of the border.

The new deal would also give American farmers greater access to Canada’s dairy industry, worth about 3.6 per cent of Canada’s current dairy market, according to the Dairy Farmers of Canada. The U.S. had negotiated access worth about 3.25 per cent of Canada’s market in the Trans-Pacific Partnership, but then withdrew, leaving that share of Canada’s market now available to dairy products from the countries that remain in the agreement, like New Zealand and Australia.

U.S. tariffs on Canadian steel and aluminum are not part of the deal. It is hoped the tariffs will be gone by the time the deal is signed, but they are subject to separate negotiations.

For more information please call Brian Rowe, Director – Customs Compliance & Regulatory Affairs at (905 882-4880, ext. 213.

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