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Trump cheers new USMCA trade deal, heralds end of NAFTA era

Proclaims the newly forged US-Mexico-Canada Agreement as the biggest trade deal in the history of the United States.


WASHINGTON—By turns triumphant and combative, U.S. President Donald Trump declared victory on behalf of American workers, farmers and businesses Monday as he heralded the death of NAFTA, the power of punitive tariffs and the end of trade-related “tensions” with Justin Trudeau.

Trump proclaimed the newly forged U.S.-Mexico-Canada Agreement as the biggest trade deal in the history of the United States, an agreement “based on the principle of fairness and reciprocity” that governs an estimated $1.2 trillion in annual trade between the three countries.

With game-changing midterm elections looming next month, it’s also likely one of the biggest political victories of the two-year-old Trump presidency, and sure to dominate Republican talking points on the campaign trail over the next five weeks.

The president held court for nearly 90 minutes at yet another rollicking White House news conference during which he acknowledged that he and Canada’s prime minister have been at odds in recent weeks as talks to reach a new continental trade pact came down to the wire.

Bygones, Trump suggested Monday.

“There was a lot of tension, I will say—between he and I, I think more specifically. And it’s all worked out. You know when it ended? About 12 o’clock last night,” he told journalists gathered in the Rose Garden.

“The only problem with Justin is he loves his people, and he’s fighting hard for his people. I think Justin’s a good person who’s doing a good job.”

David MacNaughton, Canada’s ambassador to the U.S. and a central figure in the talks, was back in Washington after a frantic weekend of long-distance negotiations, and admitted to feeling a sense of a relief that a deal was done.

“It’s been a long haul and there were times I didn’t think we were going to get to a deal,” MacNaughton said in an interview Monday.

“What I found most challenging was that it’s not like a regular business deal, or being in a golf game or a sports match; this was the Canadian economy (that was at stake) … that put an extreme amount of pressure on all of us.”

Trump also refused to be pinned down on whether he intends to ease Section 232 tariffs on Canadian exports of steel and aluminum, saying at once that the tariffs remain in place, but also that they won’t be necessary as long as Canada and Mexico honour the terms of the new agreement.

Indeed, he took Sunday’s 11th-hour agreement as vindication for a scorched-earth strategy that trade experts, economists and political leaders around the world have long denounced as an excessive tactic that would amount to little more than mutually assured economic destruction.

“Without tariffs, we wouldn’t be talking about a deal—just for those babies out there that keep talking about tariffs,” he said. “That includes Congress: ‘Oh please, don’t charge tariffs.’ Without tariffs, we wouldn’t be standing here.”

When asked specifically about existing steel and aluminum tariffs on Canadian exports, Trump said the measure “is still staying where it is,” he said, adding, “but I don’t think you will need to use the tariffs.”

That latter remark appeared to be a reference to his long-standing threat to slap a 25 per cent levy on auto imports, which is mitigated in the new deal by a side letter that exempts some 2.6 million autos from the threat of tariffs as long as they conform to the agreement’s new rules of origin.

That’s significantly more than the 1.8 million vehicles Canada typically sends to the U.S. each year, making it unlikely that auto tariffs are ever likely to come to pass under the terms of the agreement, trade experts say.

“It’s not a quota,” said one insider with knowledge of the details of the talks. “It’s an insurance policy.”

The new deal also grants the U.S. access to 3.6 per cent of the Canadian dairy market, a move roundly criticized by domestic dairy farmers but billed as the centrepiece of the agreement by a president who has made a sport of beating up on what he considers protectionist tactics in Ottawa.

“The deal includes a substantial increase in our farmers’ opportunities to export American wheat, poultry, eggs and dairy, including milk, butter, cheese, yogurt and ice cream, to name a few,” Trump said.

“Those products were not really being treated fairly, as far as those that work so hard to produce them, and now they’re going to be treated fairly.”

Under the agreement, Canadian online shoppers will also have a higher duty-free threshold for goods purchased from the U.S.—$150, up from $20. And it will no longer be necessary for U.S. firms to maintain a data centre in Canada in order to do business there, which could put the data of Canadians on servers based south of the border and subject to U.S. law.

As expected, the deal also increases patent protection for a class of drugs known as biologics from eight to 10 years, adding two years to the wait for Canadian and Mexican companies before they can produce cheaper generic versions of certain life-saving medications.

Two subjects that didn’t garner much attention Monday in the Rose Garden were major victories for Canada: the wholesale preservation of two key dispute resolution mechanisms for producers and governments alike—targeted early on as deal-breakers for Lighthizer—as well as cultural exemptions that leave Canada in control of its own media content.

“The best thing about this whole negotiation was how Canadians rallied around us and supported us,” MacNaughton said.

“From that point of view it was an extremely gratifying process to have Team Canada on the field in a meaningful, meaningful way.”

News from © Canadian Press Enterprises Inc. 2016

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