U.S., Canada and Mexico reach agreement on free trade deal to replace NAFTA, clearing way for implementation
OTTAWA — An agreement has been reached on a North American free trade deal, with all three countries set to sign the agreement today.
Deputy Prime Minister Chrystia Freeland will take part in a meeting and signing ceremony with U.S. trade czar Robert Lighthizer and their Mexican counterpart, Jesus Seade, in Mexico City this afternoon.
U.S. House Speaker Nancy Pelosi said in Washington earlier today that congressional Democrats were supportive of the changes, which paves the way for implementing legislation to finally be tabled in Congress. Pelosi called it a “victory for the American worker.”
“This is a day we’ve all been working to and working for,” she said.
Richard Neal, chair of the U.S. House Ways and Means committee, did not offer a timeline for when the deal will be tabled. He instead said the text would be first shared with stakeholders for feedback.
Pelosi did say Democrats are hoping to get moving before the end of the congressional session on Dec. 20.
The federal government revealed Freeland’s itinerary late Monday following a day of furious speculation about the state of the deal — and concerns from Canada’s aluminum sector about what the agreement could mean for the industry and workers.
Prime Minister Justin Trudeau and U.S. President Donald Trump talked directly about the deal Monday, Trudeau’s office reported, without details. Trudeau said little Tuesday as he arrived for a weekly cabinet meeting in Ottawa.
“We are working very hard,” he said in French, when asked if there was an agreement.
The U.S.-Mexico-Canada Agreement was signed by the three countries last year, but U.S. ratification has been stalled for months as congressional Democrats and organized labour have bickered with Mexico over labour rights as well as the agreement’s treatment of steel and aluminum.
There were concerns the agreement, which aims to update the 25-year-old North American Free Trade Agreement, would not be approved before Congress disperses until 2020 and its focus shifts to next fall’s presidential election.
Freeland had been cautious Monday amid chatter of an imminent deal.
“In the lives of ordinary Canadians, there is perhaps no issue in our relationship with the United States that matters more than trade,” she said in question period.
“The prime minister raised the ratification of the new NAFTA and other trade issues in his meeting last week with the president and we have been working intensively, including many conversations over the weekend and this morning with our American partners, on getting the deal finalized.”
Trump weighed in Monday, saying: “I’m hearing very good things, including from unions and others that it’s looking good. I hope they put it up to a vote, and if they put it up to a vote, it’s going to pass.
“I’m hearing a lot of strides have been made over the last 24 hours, with unions and others.”
The new deal is sure to stoke anger in some circles, with the Canadian and U.S. aluminum and automotive industries in particular angry that Mexico had not agreed to tighten the definition of what constitutes North American aluminum like it did with steel.
The breakthrough appears to have followed Mexico accepting — with a five-year phase-in period — a U.S. demand to tighten the definition of North American steel in a section of the agreement dealing with where cars and their parts can be said to originate.
Products that officially originate in North America get more favourable treatment than ones that originate abroad but come through one of the countries in the agreement.
However, Mexican Foreign Secretary Marcelo Ebrard said his country would not accept the same tighter definition for aluminum because the raw materials are not produced in Mexico.
With the transformative changes we won, Democrats have achieved a #USMCA agreement that is infinitely better for American workers than what was originally proposed by the Trump Administration. pic.twitter.com/LywXwZjWTy
Mexico also rejected U.S. demands for American inspectors to be sent in to ensure Mexican auto workers are being paid $16 per hour on average, though U.S. officials were said to have accepted Mexico’s offer to allow dispute-resolution panels to review labour-law compliance.
Labour unions in the U.S. were to be briefed on the proposed amendments on Monday with the hope they would agree to the changes, which would pave the way for the Democratic leaders to offer their own approval.
The Trump administration as well as the Canadian and Mexican governments would then be asked to agree formally to the amended deal before introducing legislation to put it into force.
Details of the amendments had yet to be communicated to Canadian industry and labour groups, but those representing the aluminum sector and its workers were upset Monday that the deal may not include a tighter definition on what constitutes North American aluminum.
“We’re certainly not happy with this at all because it simply means Mexico wants to keep an open door to foreign metal coming in from China, from the Middle East, from India,” said Aluminum Association of Canada president Jean Simard.
Noting the industry was battered by U.S. tariffs last year, Simard added: “Canada has taken the case of aluminum as much as steel up to now and we certainly expect Minister Freeland and the Canadian government to hold their position on this like they’ve been doing up to now.”
Ken Neumann, national director in Canada of the United Steelworkers union, which represents employees in both the aluminum and steel industries, was also critical of Mexico’s demand for a five-year phase-in period for tightening the definition of North American steel.
“We strongly would anticipate or hope that our government is going to stand up for our aluminum workers,” he said.
“So we’re going to keep our fingers crossed. We’re going to consult with the government of Canada to make sure they’re going to stand up for what’s right for the steel industry and for our aluminum workers.”
Neumann and other members of the United Steelworkers’ leadership team in Canada were scheduled to fly to the U.S. to be briefed Tuesday on details of the proposed amendments.
“At this stage of the game, all eyes are on where organized labour is on Mexico’s newest proposals,” said Dan Ujczo, an Ohio-based trade lawyer with law firm Dickinson Wright and an expert in Canada-U.S. trade. “If they agree, it’s likely House (of Representatives) Democrats will sign off on this.”
Yet while there is a chance that legislation could be introduced this week and passed by Congress before Dec. 20 to bring the deal into force, Ujczo warned there still could be unexpected hurdles.
“Nobody has seen the implementing bill soup-to-nuts,” he said. “So we’re closing Phase 1 of the deal process, then we’re on to Phase 2, which will be we’ll all have to take a look at the implementing bill.”
The new trade pact would replace NAFTA, which came into force in 1994 and eliminated most tariffs and other trade barriers involving the United States, Mexico and Canada.
Critics, including Trump, labour unions and many Democratic lawmakers, branded NAFTA a job-killer for America because it encouraged factories to move south of the border, capitalize on low-wage Mexican workers and ship products back to the U.S. duty-free.
Mexico ratified the new North American deal in June while the Canadian government has said it is waiting to ratify the agreement at the same time as the United States.