Canada, Mexico, and the United States came to an agreement over the weekend updating The North American Free Trade Agreement (NAFTA).
NAFTA is a nearly 25-year-old trade, $1.2 trillion agreement between Canada, Mexico and the United States, according to The Washington Post. As the largest free trade agreement in the world, NAFTA defines tariffs, imports and exports.
This agreement was created to expand trade between Canada, Mexico and the United States, allowing the three countries to be seen as competitive in the global market.
“The agreement also preserves and expands-critical access for U.S. poultry and egg producers and addresses Canada’s discriminatory wheat grading process to help U.S. wheat growers along the border become more competitive,” said U.S. Department of Agriculture Secretary Sonny Perdue in a statement released Monday.
The agreement was finalized amid growing tensions between U.S. and Canada leadership. As of last week, no resolution was in sight.
On September 26, 2018, the U.S. intended to push forward with a new bilateral trade deal with only Mexico. Following this decision, a group of Congress members urged the Trump Administration to reassess their trade stances with bordering countries.
U.S. Representatives Ron Kind (D-WI), Suzan DelBene (D-WA) and Brian Higgins (D-NY) sent a letter to the Office of the United States Trade Representative, Robert E. Lighthizer, on September 26, asking the Trump administration to “get the NAFTA renegotiation right with both Canada and Mexico rather than rush to meet artificially imposed deadlines at the expense of a good outcome,” as stated in their letter.
As late as last week, President Trump threatened the U.S.-Canada trade relationship with tax exports on cars sent to the U.S. from Canada, according to The New York Times.
Trump also declined to meet with Prime Minister Justin Trudeau of Canada at the United Nations General Assembly on September 26, 2018. Trump announced his disapproval with Canada, stating the country has treated the U.S. “very badly.”
In their September 26 letter, Kind, DelBene, and Higgens expressed concern over comments from the Administration as well as some member of Congress regarding “advanced statutory obligations that require an agreement to be signed imminently.”
They believed no deadline for such an agreement existed and did not believe a timeline should command the matters of negotiation.
“There are a number of vitally important issues still open, but one such issue which has long challenged the U.S.-Canada trade relationship is of particular interest to us: access to the Canadian dairy market for U.S. farmers,” they stated.
Over months of debate, there has been a slow amount of progress with the Class 7 National Ingredients Strategy and the closed dairy market trade deals.
Canada’s closed dairy market is complex. Their supply-management system aims to bring stability to the price of milk, as well as eggs and poultry products. Canada blocks imports from other countries including the U.S. by imposing tariffs of 270 percent on all dairy products, according to The Atlantic.
The letter stated this particular negotiation “has displaced current U.S. imports and threatens to negatively impact milk powder markets worldwide.”
The “new NAFTA,” now known as the U.S.-Mexico-Canada Agreement, includes a provision for Canada to open their milk market to U.S. farmers. Among new renegotiations, Canada will keep most of its dairy system in place but will give more market share to U.S. dairy farmers.
This provision will allow U.S. dairy farmers the ability to send products such as skim milk powder, milk protein concentrate and infant formula to Canada, according to the Washington Post.
Congress members have expressed that for a successful NAFTA renegotiation to occur, there must be more progress made with the U.S.-Canadian trade relationship, including discussion regarding the Canadian dairy market.
There have been no new comments from Kind, Delbene and Higgens regarding their requests in light of the U.S.-Mexico-Canada Agreement.
But in their letter sent last week, the representatives stated: “The opportunity to renegotiate our trading relationship with our closest friends and allies can often happen once in a generation.
Trump has vocalized his stance on NAFTA.
“I don’t like NAFTA. I’ve never liked it. It’s been very bad for the United States. It’s been great for Canada, great for Mexico,” as noted in a recent New York Times article.
According to Global News, Canadian Foreign Affairs Minister Chrystia Freeland commented on the new agreement, “this is a victory for Canadians.”