\u201cSometimes, the biggest victories are the bad things prevented, rather than new things built.\u201d
\n<\/p>\n
In an interview with CBC News on June 27, Scotiabank\u2019s deputy chief economist Brett House used the term \u201cbullet dodged\u201d to describe the ratification of the new NAFTA deal, or USMCA, ahead of the chaos wrought by COVID-19.<\/p>\n
\u201cSometimes, the biggest victories are the bad things prevented, rather than new things built,\u201d he said.<\/p>\n
Let\u2019s be clear: the USMCA doesn\u2019t substantially liberalize more trade between Canada and its North American partners. Most tariffs had already been eliminated. Some parts even add more protectionism, such as requiring automotive manufacturers to use more local components. Instead, the intention was to \u201cmodernize NAFTA for the 21st century.\u201d Yet a threat by the Trump administration to reimpose aluminum tariffs in late June shows that the White House remains highly unpredictable in its dealings with Canada.<\/p>\n
With one eye on the November election, the Trump administration insisted on a June 1 implementation date for the USMCA, which was later pushed back to July 1. Canada and Mexico agreed, paving the way for the Canada Day starting line. In a paper released on June 30 by the C.D. Howe Institute, consultant trade economist Dan Ciuriak tried to make sense of how the landscape for the USMCA looks now\u2014amid a pandemic that\u2019s disrupted international supply chains, barred all but essential cross-border travel, and introduced the possibility of governments constricting trade on national security grounds.<\/p>\n
\u201cThere are many sources of uncertainty that at present do not lend themselves to a robust quantification,\u201d Ciuriak concluded. \u201cThe known knowns promise to be negative on balance; as for the known unknowns, time will tell.\u201d For example, carmakers, faced with dormant supply chains and factories, have more urgent priorities right now than the new protectionist manufacturing policy on components. Elsewhere, one key change to the new-look deal is the abolition of the investor-state dispute system (ISDS) which enabled companies to bypass regular courts and challenge the regulatory decisions of Canadian governments through NAFTA arbitration.<\/p>\n
The big question in the long term is whether the revised agreement will eventually succeed in fulfilling\u00a0Trump’s pledge of returning more automotive jobs and investment to the U.S. and Canada, or whether manufacturers will instead choose to pay Mexican workers more. Under the new agreement, it\u2019s now possible for claims of labor violations to be pursued against Mexico through a now-revised state-to-state dispute resolution process.<\/p>\n
Yet as it reworks its supply chain strategy, Mexico may also collaborate\u00a0with other countries \u2014 especially other Latin American countries that also have free trade agreements with the U.S., such as Colombia. Over the long term, it is hard not to see the price of cars going up as the necessity of buying North American components and new labor regulations will be more expensive.<\/p>\n
For most everyday consumers, however, the changes to the new NAFTA will be almost unnoticeable\u2014and may even produce a few gains. Goods shipped from by U.S. by courier services will no longer face customs duties if they\u2019re valued under $150, and won\u2019t incur sales taxes if they\u2019re worth less than\u00a0$40. If purchases are shipped by mail, however, the previous threshold of $20 will still apply. Elsewhere, while the market access conceded to the U.S. for supply-managed agricultural products like dairy, eggs, and poultry should spur more competitive pricing and allow for more consumer choice, it\u2019s not a given, mainly because the pandemic has dramatically disrupted food supplies.<\/p>\n
While the implementation of the USMCA should have been an opportunity for celebration, the Trump administration’s attempt to prevent 3M from shipping N95 masks to Canada is an example of how quickly relations between the two countries could turn sour, even with the deal in place.<\/p>\n
Hassan Yussuff, the president of the Canadian Labour Council who also served on Canada\u2019s NAFTA advisory council during the negotiations, has said he hopes the deal brings positive\u00a0changes to the lives of working people in Mexico and makes employers think twice about leaving Canada in the first place\u2014easing the resentment workers felt about the original NAFTA. Let\u2019s hope so. COVID-19 is encouraging countries all over the world to rethink how much they can get away with on trade, and to reconsider the importance of making certain products at home.<\/p>\n","protected":false},"excerpt":{"rendered":"
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