TRADE BREAKTHROUGH AS DEAL NEARS U.S. VOTE
Freeland, U.S. negotiators in Mexico
OTTAWA • Prime Minister Justin Trudeau appeared to be one step closer to finalizing a free- trade pact with the U. S. and Mexico on Monday, potentially ending a prolonged political deadlock that has weighed on the broader Canadian economy.
An agreement to ratify the U. S.- Mexico- Canada Agreement (USMCA) would notch a major political victory for the battered Liberals, who returned to Parliament last week with a minority government and a weakened mandate. Concerns had been growing that House Democrats in the U. S. would not ratify the deal before 2020, after which attention would turn toward the presidential election and ongoing impeachment proceedings.
USMCA was signed by the three countries last year, but U.S. ratification has been stalled for months amid disagreements over Mexican labour rights and the agreement’s treatment of steel and aluminum, among other things.
Speculation about a potential deal came after news reports by Bloomberg and The Associated Press on Monday, which said U. S. President Donald Trump and the Democrats had reached a deal on the latest version of USMCA, which replaces the 25 - year- old North American Free Trade Agreement.
As of late Monday afternoon, House Speaker Nancy Pelosi had not yet signed off on the deal. She has been reviewing changes to the agreement that U. S. Trade Representative Robert Lighthizer and his Mexican counterpart Jesús Seade have put on paper over the past week.
Deputy Prime Minister Chrystia Freeland, who led USMCA negotiations for Canada, said in the House of Commons on Monday that Trudeau discussed the new trade deal in his meeting with U. S. President Donald Trump last week. She did not confirm whether the U.S. was close to an agreement.
“In the lives of ordinary Canadians, there is perhaps no issue in our relationship with the United States that matters more than trade,” she said in Question Period.
Freeland said Canadian officials “have been working intensively, including ( having) many conversations over the weekend and this morning with our American partners on getting the deal finalized.”
Freeland is meeting with U. S. and Mexican officials in Mexico on Tuesday.
A potential agreement would remove a major anchor on the Canadian economy. The Bank of Canada, among other observers, has pointed to trade uncertainty as a key reason why business investment has been slower than expected, crimping GDP growth.
Trump also told reporters on Monday that stakeholders had been making “strides” toward ratification.
“I’m hearing very good things,” he said. “I’m hearing from unions and others that it’s looking good, and I hope they put it up to a vote.”
He had earlier criticized Pelosi for delaying ratification, saying in a Tweet on Saturday that “our economy would be even better” if Democrats had not called for additional amendments and slowed the approval process.
Mexican President Andres Manuel Lopez Obrador said earlier Monday that he expects a decision from the U.S. on the agreement very soon, saying it is “the moment” for ratification to begin.
“Now is the time to vote on it,” Lopez Obrador said Monday. “I am optimistic we can reach a deal.”
Even if Congress decides to move ahead, the U. S. ratification system is complex and would take some time to come into force. Some trade experts still believe that differences over the latest round of amendments could scupper a final agreement.
The White House and Democrats have spent months locked in tense negotiations over four key areas: environment, labour commitments, drug- patent protections and enforcement mechanisms. In recent weeks, the discussions have focused on the deal’s labour enforcement.
One of the main sticking points was a Democratic proposal to enforce labour rights by allowing products from factories accused of violations to be inspected and blocked at the U. S. border. California Representative Jimmy Gomez, a member of House Democratic negotiating team, said last week that Pelosi and Lighthizer have offered Mexico a compromise on labour enforcement that “respects Mexico’s sovereignty.”
However, the latest breakthrough appears to have followed Mexico accepting — with a five-year phase-in period — a U.S. demand to tighten the definition of North American steel in a section of the agreement dealing with where cars and their parts can be said to originate.
Products that officially originate in North America get more favourable treatment than ones that originate abroad but come through one of the countries in the agreement.
The latest version of the deal will have to get sign- off from major U. S. unions on the issue of steel and aluminum and other provisions that have snarled talks so far.
“At this stage of the game, all eyes are on where organized labour is on Mexico’s newest proposals,” said Dan Ujczo, an Ohio- based trade lawyer with law firm Dickinson Wright and an expert in Canada- U. S. trade. “If they agree, it’s likely House ( of Representatives) Democrats will sign off on this.”