A new trade deal was finalized among the three countries of North America on December 10, 2019. The deal is a new version of the existing trade agreement called the North American Free Trade Agreement (NAFTA), which came into force on January 1, 1994, among the US, Canada, and Mexico.
The Journey of the New Trade Deal
Since 2017, the trade agreement among NAFTA countries was at a standstill. These countries signed a North American free trade deal in 2018 but the deal lapsed since the US Congress held its ratification of the deal.
Opposing the agreement, the Democratic Party leaders had put forward several concerns over Mexico’s trade policies including poor labor rights and laws related to aluminum and steel industries.
Moreover, the Democrats attacked the deal, as Mexico had been involved in the contempt of intellectual-property rules on pharmaceuticals and dispute settlement procedures. These issues led the US congress to refrain from signing the trade deal and want to start a new round of negotiations regarding the trade agreement.
Citing the intense struggles of negotiations of the deal, the Canadian Deputy Prime Minister, Chrystia Freeland, stated in the signing ceremony, “This has been a long, arduous and at times fraught negotiation.”
The deal was also signed by Robert Lighthizer, the minister of the U.S. Trade Representative, and Jesus Seade, the Mexican Undersecretary for North America. Freeland elaborated, “All of us together have finally accomplished what we set out to do at the very outset: a win-win agreement which will provide stability for workers in all three of our countries for many years to come.”
Mixed Response and Key Challenges of the Deal
In Canada, the new deal received a mixed response and some industry associations are likely to oppose the deal. The Canadian Chamber of Commerce, the Business Council of Canada, and Labor unions named Unifor are among the industries that supported the deal.
According to Jerry Dias, the Unifor’s National President, “The new (deal), while far from perfect, provides a road map to implement necessary changes in trade policy to benefit workers.
The improvements announced today are a helpful boost in achieving those objectives.” Sujata Dey, a trade campaigner for the Council of Canadians, shared a view that the new deal has brought some positive changes despite certain flaws. Dey continued, “The changes to this deal show that while we are up against unprecedented corporate power, we are able to make a difference when we work together.”
The deal will cause severe impacts mainly on the aluminum and pharmaceutical industries, as Mexico agrees to bring a policy change in the steel industry but not in aluminum and no substantive measures are decided on the contempt of intellectual-property rights for medical industries.
Pamela Fralick, the President of Innovative Medicines Canada, stated, “This is disappointing news for Canada’s innovative pharmaceutical industry, which is already facing significant challenges launching new medicines and attracting new investment in Canada.”
Mentioning the deal is for “Canada’s national interest”, Freeland elaborated that the new deal would provide more advantages, especially for the aluminum industry, and the changes would benefit everyone in Canada.
The key problem; however, is the agreement needs to be ratified by each country to finalize it. This means each country needs to table the deal in front of the opposition parties and take support for the ratification. Liberals have a minority in Canada’s Parliament and to ratify the deal Liberals need support from the opposition parties.
However, the US is more likely to ratify the deal soon, as the opposition party showed their willingness to support. As explained by Nancy Pelosi, U.S. House Speaker, “Democrats were supportive of the changes, paving the way for implementing legislation to finally be tabled in Congress.”
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