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NAFTA No More: Here comes the USMCA

Posted: October 1, 2018

Trucks move the majority of traded goods, by value.

TORONTO, Ont. – Negotiators from Canada and the U.S. have found common ground for a new trade deal, just ahead of a U.S.-imposed deadline, establishing the United States-Mexico-Canada Agreement (USMCA).

Details of the proposed replacement for NAFTA began to emerge late last night, but Canada appears to have spared from threatened 20-25% duties on the automotive sector.

The mere presence of a deal will be a relief for Canada’s trucking industry, which by value moves most of the goods traded across the 49th parallel. The freight flowing between Canada and the U.S. was valued at $582.4 billion between 2016 and 2017, according to the U.S. Department of Transportation. In 2017, trucks carried half of the $300 billion of goods imported from Canada, and 65.7% of the $282.5 billion of goods exported to Canada.

But for now, 25% tariffs on steel and 10% tariffs on aluminum remain. Those have already been affecting businesses such as Canadian trailer manufacturers. 

It is early and there are a lot of details that may yet come out, but in general the agreement looks positive for our sector,” says Don Moore, director – government and industry relations for the Canadian Transportation Equipment Association.

“On the other hand, the steel and aluminum tariffs are still in effect and apparently are under negotiations. This is still a very troublesome issue and we are very concerned as we have indicated in the past. We need the tariffs to be removed as soon as possible, particularly with our membership being largely small- and medium-sized entities who are large users of steel and aluminum.”

The tariff-related negotiations continue.

Other highlights of the USMCA include greater access to Canadian markets for American dairy producers, and a dispute resolution mechanism for the broader trade deal remains in place.

“Today, Canada and the United States reached an agreement, alongside Mexico, on a new, modernized trade agreement for the 21st Century,” Foreign Affairs Minister Chrystia Freeland and U.S. trade representative Robert Lighthizer said in a joint statement. “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.”

“We look forward to further deepening our close economic ties when this new agreement enters into force,” they said, also thanking Mexican Economy Secretary Ildefonso Guajardo for his work over the past 13 months.

“We reached a wonderful new trade deal with Canada, to be added into the deal already reached with Mexico,” said U.S. President Donald Trump, through his Twitter account.

“It is a great deal for all three countries, solves many of the deficiencies and mistakes in NAFTA, greatly opens markets to our farmers and manufacturers, reduces trade barriers to the U.S., and will bring all three great nations together in competition with the rest of the world.”

  • With files from Steve Bouchard, Transport Routier. An original version of this article was edited to reflect comments from CTEA.
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