Md. Ashraful Kabir, Toronto, Canada
A generation ago, the Brian Mulroney government negotiated its own deal with the U.S., and then with Mexico, to form the North American Free Trade Agreement (NAFTA).
This Last weekend of September, negotiators from Canada and the United States put pen to paper on a new North American trade pact — awkwardly called the United States-Mexico-Canada Agreement (USMCA) — after a roller-coaster year of talks.
For 25 years, Canada’s labour movement called for NAFTA’s renegotiation. Thankfully, last year we had our first chance in a generation to do so. Anyone trying to tell you the new trade deal with Mexico and the United States — the new USMCA — is a win for Canada is just wrong.
Canada made concessions because we need access to the 327 million person American market far more than they need access to our 36 million consumers. We made concessions because there’s not much we make that they can’t also create at about the same cost. Yes, we have comparative advantages in places, but not so great the American economy is desperate and dependent on them.
When a mugger pulls a knife, making concessions about your cellphone, wallet and car keys is about the best you can hope for. But don’t call it a win.
The Canadian government offered $4.3 billion in compensation to farmers (that concession went away when Trump was elected and withdrew the U.S. from TPP). The impact on drug prices from the extension of copyright monopoly will have an impact on drug benefit plans, public and private. These are not small matters. After more than a year of talks, Canada finalized a revamped free-trade deal with the United States and Mexico. The new deal, dubbed the U.S.-Mexico-Canada Agreement, or USMCA, will replace the North American Free Trade Agreement.
Prime Minister Justin Trudeau called the deal “profoundly beneficial for our economy, for Canadian families, and for the middle class.” But – Reactions to the deal have been mixed.
From the beginning, the emphasis for the Canadian team was to produce a “progressive” deal that put the needs of working people, and their families and communities, first. But what we did get, however, was significant.
Consider that, for the first time, there has been an honest discussion about the need for strong labour standards governing trade. In the USMCA, there is language designed to promote free and independent trade unions in Mexico — not the company unions that held workers back. As well, 40 per cent of the content of a car, and 45 per cent of a truck, must be sourced from plants paying workers on average $20 Canadian.
There are also increased content rules for vehicles. Cars must contain 75 per cent North American content — up from 62.5 per cent in NAFTA — to be considered North American made. As well, Canada was effectively exempted from U.S. President Donald Trump’s threat of tariffs on cars and trucks. These provisions alone directly address some of the major issues that caused good auto jobs leave Canada.
There’s more, including two very important provisions that will help our media industries in Canada. The cultural exemption for culture has been preserved, despite Trump’s wishes. Having a cultural exemption protects our media companies from being taken over by much-larger U.S. companies, and allows us to regulate Canadian content in the public interest.
On top of that, the USMCA removes the Stephen Harper-era policy requiring TV broadcasters in Canada to air U.S. Super Bowl TV ads in this country. This rule cost Canadian broadcasters the revenue they needed to fund local news and create quality Canadian-made entertainment. A cultural exemption is one thing, but you still need the money to produce the content.
For the first time, Canada has negotiated removal of an Investor-State Dispute Settlement (ISDS) clause from a trade deal. ISDS clauses allowed private investors to sue governments for decisions that hurt profits, even if those decisions are in the public interest.
Let’s be candid though, there are also some major concerns.
New patent rules could lead to higher drug prices, all the more reason Canada needs to establish a national Pharmacare program. Supply managed farmers, particularly in dairy, will be affected by rising imports, compounding the negative effect of previous deals (like the Canada-European Union CETA, and the pending trans-pacific trade pact) negotiated by the former Conservative government. Immediate aid is needed to help farmers adjust.
National security tariffs imposed on Canadian exports of steel and aluminum remain in place, continuing the uncertainty for Canadian workers. The USMCA contemplates a process for further negotiation, and it’s imperative that a timely resolution is reached.
Unfair U.S. duties on Canada’s softwood lumber also remain intact, but thankfully, Canada’s negotiators held onto an important dispute settlement system to challenge these tariffs, despite U.S. opposition.
Trade deals need not be only about corporate profits and privilege. The assumption that if you help corporations, people will benefit as a side effect, is being fundamentally challenged.
The USMCA is certainly far from perfect. It won’t be the last trade deal Canada negotiates But at last I can say the winners from the deal are – Automakers, Environment, Cultural Industries, Online Shoppers. And the losers are Dairy Farmers, Steel and Aluminum sector, Drugs industry. But as a Canadian citizen I will be still expecting a high standard living as our Prime Minister said after this trade deal finalized.