Most manufacturers across Canada breathed a collective sigh of relief when Canadian negotiators announced, at long last, an agreement on NAFTA – now known as the United States Mexica Canada Agreement (USMCA).
Most because, as of writing this piece, there is one glaring omission from the deal that impacts many Alberta manufacturers. Steel and aluminum tariffs – those imposed by the Trump administration (absurdly under the auspices of “national security”) and the retaliatory tariffs enacted by the Trudeau government remain in place. The feds assure us they are working on a resolution, but until we get some good news this remains our number one challenge related to the deal.
Beyond the steel and aluminum issue, however, there’s much to be happy about. In all, 10 of 11 Canadian Manufacturers & Exporters (CME) recommendations for USMCA were at least partially adopted.
Top trade irritants for manufacturers have long included red tape and delays at customs. The USMCA commits the three countries to updating customs procedures, reducing administrative burdens, increasing security and speeding up border crossing times. Canada also agreed to increase the dollar amount Canadians can purchase goods online duty free from $20 to $150.
Chapter 19, the critically important dispute resolution process that the Americans have always disliked, remains in place. In keeping Chapter 19, Canadian business dodged a bullet. On government procurement, the new agreement adopts the World Trade Organization’s government framework. This won’t eliminate “buy American” provisions, but it ensures much better access than was being proposed by the US during the negotiations.
The deal also commits the three countries to developing a common approach to addressing unfair trade practices from outside the region – an approach that seeks to address industry concerns around currency manipulation, illegal substitution and dumping. The deal calls for an effort to identify and eliminate non-tariff trade barriers and develop a “unified” approach to raising regulatory, environmental and labour standards outside the USMCA to North American levels.
A modern digital trade chapter within the USMCA will be created to support growth in the digital economy and manufacturing.
All in, the USMCA is a solid agreement that hopefully ends a nightmarish year and a half of uncertainty. Against a formidable and cantankerous opponent in President Trump, the federal government negotiated hard and successfully defended critical pieces that manufacturers rely on. The deal isn’t perfect, but it was never going to be. The primary objective throughout this process was keeping what we had – access to US and Mexican markets.
Now we must work on getting rid of those steel and aluminum tariffs that are so damaging to so many businesses on both sides of the border.
It was an ugly process but in the end the system worked – we worked together and achieved a deal that will generate growth in the manufacturing sector and avoided harm to supply chains.
Canadian Manufacturers & Exporters (CME) is the voice of Canadian manufacturing. CME represents more than 2,500 companies who account for an estimated 82 per cent of manufacturing output and 90 per cent of Canada’s exports.