Manufacturers relieved in wake of NAFTA

October 1, 2018 – Reaction from Canadian business groups to the terms of a renegotiated trade pact between Canada, the U.S. and Mexico range from relief to dismay as the details of the proposed new pact begin to sink in.

The deal, which U.S. President Donald Trump said he plans to call the United States Mexico Canada Agreement (USMCA), was reached late Sunday night amid 11th-hour negotiations ahead of the U.S.-imposed Oct. 1 deadline.

The steel and aluminum industry has expressed concern that the trade deal doesn’t include an end to tariffs, dairy producers claim it will completely undercut their industry, while manufacturers – especially the automotive industry – have welcomed an end to the
threat of tariffs and the many months of uncertainty.

“Certainly disappointed because they didn’t agree on a solution on the 232 sanctions regarding aluminum and steel,” says Jean Simard, CEO of the Aluminium Association of Canada.

“We find it very unfortunate, and to us it’s certainly very important in the coming days and weeks leading to the final signing of the agreement that they are able to resolve the situation.”

United Steelworkers Canadian director Ken Neumann says Canada “sold out” steel and aluminum workers by not getting the 25 per cent steel tariffs and 10 per cent aluminum tariffs.

“It appears Canadian steel and aluminum workers are among those being sacrificed in the concessions made by the Liberal government in this deal,” he says in a statement.

The dairy industry was also heavily critical of the deal, which will grant expanded market access to the domestic dairy market and eliminate competitive dairy classes.

Bruno Letendre, head of the association that represents Quebec’s milk producers, says the concessions in the agreement are the equivalent of 13 days fewer production for his members.

“We’ve been sacrificed,” he said in an interview. “There’s no doubt about that. Supply management has been sacrificed.”

The measures will have a “dramatic impact” on dairy farmers and cause the industry to shrink, says Pierre Lampron, president of Dairy Farmers Canada, in a statement. “This has happened, despite assurances that our government would not sign a bad deal for Canadians.”

The general sentiment among manufacturers is one of relief, says Dennis Darby, president and CEO of Canadian Manufacturers & Exporters.

“It removes that uncertainty that was hanging over the sector, in terms of our access to this North American market, in terms of the rules related to our integrated North American supply chain.”

He said he hopes the aluminum and steel tariffs can be resolved shortly, but that the manufacturing industry didn’t lose on what’s in the new deal.

“At a minimum we haven’t lost any ground. Versus a very unpredictable and protectionist U.S. administration, I think Canada did as well as it could.”

The deal preserved the key dispute-resolution provisions – Chapter 19 – which allow for independent panels to resolve disputes involving companies and governments, as well as Chapter 20, the government-to-government dispute-settlement mechanism.

A side letter published along with the main text of the agreement exempts a percentage of eligible auto exports from the tariffs. A similar agreement between Mexico and the U.S. preserves duty-free access to the U.S. market for vehicles that comply with the agreement’s rules of origin.

News from © The Canadian Press Enterprises 2018