On the heels of an arbitrary — and, it turns out, unnecessary — deadline, Canada, Mexico and the United States have finalized a renegotiation the North American Free Trade Agreement (NAFTA). The new deal is called the United States-Mexico-Canada Agreement (USMCA):
What’s in it?
- Dairy: Expanded American access to Canada’s tightly regulated milk market.
- Dispute resolution: An expert panel to resolve trade disputes, that has repeatedly ruled in favor of Canadian lumber exports, remains in place.
- National security: America can still impose 25-percent tariffs on cars and car parts on national security grounds, but the new deal carves out generous exemptions for Canada and Mexico.
- Rules of origin: The share of auto parts manufactured regionally to benefit from the trade agreement rises from 62.5 to 75 percent, which may benefit American companies.
- Sunset clause: Unlike NAFTA, the new deal is set to expire in sixteen years.
- Wages: 40 percent of a car’s value needs to be made in areas paying workers at least $16 per hour, which could shift production to Canada and the United States.
In short: A lot of fire and fury from Donald Trump — who refused to even meet Canadian prime minister Justin Trudeau on the sidelines of the United Nations General Assembly last week — but in the end only modest changes.