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Canada-US Trade Relations

Edward Campbell

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Infanteer said:
I was going to post Ivison's editorial, but recceguy beat me to it.  Its worth the read before we pop open the champagne bottles and call this a win.  That being said, I'm not sure if a Conservative Party government could have done any better: the administration to the South has demonstrated time and again that it has interests - its own - and not friends.  Leaders who tried to schmooze the President (Abe, Macron) got their fingers burnt.

Lesson to be learned?  As Ted Campbell continuously points out on his blog, we better work on diversifying our trade - if anything to reduce our vulnerability the next time this happens.


+300 for the highlighted bit, and thanks for the plug ...

It is damned hard to diversify trade: the Americans are so close and, generally, despite the current POTUS, so open, and, also generally, so fair that it's hard to not want to put most of our trade eggs in their basket. They are, in most respects, just about our domestic market. In fact I suspect that one of Robert Lighthizer's aims is to "domesticate" Canada so that we are even more closely tied to the USA.

In this case geography is both a short term friend and, perhaps, a long term enemy.
 

SeaKingTacco

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E.R. Campbell said:
+300 for the highlighted bit, and thanks for the plug ...

It is damned hard to diversify trade: the Americans are so close and, generally, despite the current POTUS, so open, and, also generally, so fair that it's hard to not want to put most of our trade eggs in their basket. They are, in most respects, just about our domestic market. In fact I suspect that one of Robert Lighthizer's aims is to "domesticate" Canada so that we are even more closely tied to the USA.

In this case geography is both a short term friend and, perhaps, a long term enemy.

Having now had a day and a half to think about this deal, I think Edward has it about right. As much as anyone can decern a US "strategy", I think it was to create a unified North American trading bloc where the US calls the shots.

Given what I have read about this deal and the quotas on future car imports from Canada; the 6 year review clause; the establishment of a bank rate committee and the requirement for any partner in the USMCA now to seek approval from the other partners if one is to sign free trade agreement outside of the deal, I think there is a significant loss of sovereignty for Canada. Maybe it is just a nod to reality.

It is now an interesting thought experiment, but what if Canada had gone to 2% GDP on defence and had bougt F35 and done BMD (and probably a few other things) would we have had a different deal? A better deal?

This is not just a Liberal problem- the Conservatives have under-funded defence at every possible chance, too. Both parties have taken their cues from an apathetic Canadian public that likes to be sovereign, but doesn't actually want to pay the freight.
 

Fishbone Jones

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Brihard said:
And don’t forget, we went into this with a gun to the head of our auto sector, after already suffering an attack - and I choose that word deliberately - on our steel and aluminum. Trump himself has spoken of a trade war. Well if it’s a war, Trump is on one side and Canada is on the other, and you can only pick one or the other. In the end, despite the blustering and threats, it appears the adults prevailed and we have at least reached a détent, though much remains to be seen.

Trump will continue to have his supporters and apologists here who value his politics above our own economy, and value his populism over common decency. It is what it is. We have at least come out of this one pretty OK, and given the strength the US wields and our utter economic dependence on them, we hav some key victories in the preservation of the dispute resolution and the built in tariff exemptions for cars. We weathered the storm well, and hopefully in another month he will lose Congress and we will be less subject to his petulant outbursts, at least in tangible terms.

"Trump will continue to have his supporters and apologists here who value his politics above our own economy, and value his populism over common decency."

Whoa, who are you speaking of in this quote of yours? I'm confused and need clarification on who the indecent Trump apologist to Canada is (that's what you were going for, right?). This sounds very much like a personal attack on someone here. Someone you don't agree with, but instead of discussing, you attack their patriotism and political belief because of a personal bias you have with them and their ideas. Not something I'd expect from someone of your profession. However, that's why I asked for clarification, from the horse's mouth.

Much like when people lie through their teeth about someone being a very hard, long time far right supporter. Trying to paint that person as a supremacist or a racist or something they are not.

Have I got that right? Just need some clarification, is all. I resigned as a Moderator and I'm feeling my way around as a normal poster. I'm planning on being here a whole bunch more and need to see exactly where the line is. I need to know if writing, something like you did, even if that person is not identified by name (though common knowledge, here, identifies them) would be considered a sideways slap that would get someone else warned. Given your propensity for the technique, your past Moderator experience and the senior member stature you hold, I'm guessing you're not breaking any rules.

This info will help me form a writing style that gets my point(s) across without getting in trouble. Thanks for the help :mountie:




 

a_majoor

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I will ahve to disagree with you FJAG, in the sense that "we" did not know what the Americans wanted. Once you discount the big opening moves to uput us off balance, there are several things which the US clearly is looking to achieve with the current round of trade negotiations:

1. Replacing multilateral deals with bilateral deals. This provides far more flexibility for the President and the Congress to make adjustments to trade deals, without having to drag all and sundry into the negotiations. This is likely to be retained by future administrations because of the ability to tailor deals to reflect changing conditions.

2. Reduce US trade deficits. This is a long standing issue with President Trump, you can find a YouTube video of him saying exactly the same thing in 1989 on the Oprah Winfrey Show (and the audience then was actually listening to this with a great deal of interest and respect). Any trade deal or renegotiated one will have to provide the openings for US goods and services to be traded on a more "equitable" basis. If you think that is selfish or foolish, remember the saying that nations have no permanent friends and allies, only permanent interests. The US is looking out for a permanent interest.

3. Hampering the expansion of Chinese military, political and economic power. This is actually far more subtle than people are willing to give credit for. China exports far more to the United States than it imports, so tariffs work asymmetrically. As well, China's economy is heavily invested in exporting, anything which slows the flow of exports also slows the Chinese economy. Edward has told us at length that the "Red Dynasty's Mandate from Heaven" relies on continuing economic growth. Since China is also heavily leveraged, there could be follow on consequences to slowing economic growth as well.

4. Closing back doors. China uses Canada as a back door to enter the American market tariff free, and the Administration was determined to close that door.

On this side, Canada has failed rather spectacularly.

1. We knew this was coming as far back as the 2016 election campaign, but the actions of the negotiating team are those of people thrown into the game at the last minute.

2. Canada has not cleared the decks internally to deal with possible fallout of NAFTA negotiations. We have no internal Free Trade between provinces. Our Hydrocarbon industry is crippled and Canada loses billions of dollars in potential revenues because there are no pipelines to bring oil to markets (and adding insult to injury, we still need to spend billions more importing foreign oil....)

3. Canada's negotiating team seems to have no understanding of US domestic politics. They looked for support from Bob Corker and Jeff Flake, despite the fact these are lame duck senators, with very limited ability left to advance our cause in the Congress. They also failed to understand that NAFTA and jobs is a huge domestic issue in the United States, and President Trump could play it very hard, especially against Senators and Congressmen who were inclined to vote against the new trade deal. Nothing like having angry constituents at your door.

4. Canada also seems to have no plan "B". We have hardly taken advantage of being in  the TPP or CETA (indeed Andrew Sheer tried to get a special session of Parliament to debate the issue), and I hardly have to point out that Canada was essentially kicked to the curb by both China and India when seeking new trade deals. If we knew that NAFTA might be a difficult issue, then there should have been a full court press to fully diversify our trade. Currently, 75% of our exports go to the United States and that makes about 20% of our GDP. The math is apocalyptic. And placing tariffs against the US? The amount of GDP they get from exports to us is about 1%; a rounding error.

So we, or at least people who paid attention, knew what the US wanted in the negotiations, and also knew just what level of disadvantage we were going into. Yet despite that, we failed to prepare for the negotiations either internally or externally, and so will be paying the price for a long time to come.
 

Fishbone Jones

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Too bad the world didn't have the gonads to take Trump up on his offer of zero tariff 100% free trade. But that would be true capitalism in action. Markets and goods sold and traded, more and more, based on quality and expense and what people want. Not what the government wants. Shysters and cheap goods eventually fall by the wayside to become the Made in Japan junk products of the 50's.
 

a_majoor

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Here it is, THE win the Untied States got in the USMCA deal:

https://theconservativetreehouse.com/2018/10/01/massive-win-nafta-loophole-closed-canada-and-mexico-agree-to-u-s-approval-authority-of-any-future-trade-agreements-with-third-parties/

Read the article and digest what that really means.....
 

mariomike

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Thucydides said:
Read the article and digest what that really means.....

I didn't study international trade in school. So, how much credibility can I give a blogger named "sundance"?
 

Remius

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mariomike said:
I didn't study international trade in school. So, how much credibility can I give a blogger named "sundance"?

True.  But the article has merit.

This from MacLean's touches on the same issue amongst others. 

https://www.macleans.ca/opinion/the-usmca-keeps-canada-in-americas-thrall/

Also Thucydides gets a special mention in the article  ;D
 

Fishbone Jones

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mariomike said:
I didn't study international trade in school. So, how much credibility can I give a blogger named "sundance"?

I didn't read the blog. The Article is there in black and white and pretty well says it all. No course on International Trade required nor insight into 'sundance's' brain housing group.
 

mariomike

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Remius said:
This from MacLean's touches on the same issue amongst others. 

Thank-you.

By David Moscrop,

"David Moscrop is a political scientist and a writer. He’s currently working on a book about why we make bad political decisions and how we can make better ones. He’s at @david_moscrop on Twitter. He lives in Vancouver."

Nice to know who the author is.  :)

No offence to "sundance".
 

garb811

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This is getting a lock while the DS sort a few things out.

-Milnet.ca staff
 

PuckChaser

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Ladies and gentlemen,

Things started to get out of hand enough that we had to hand out a few strikes. This is your not so subtle reminder to debate the issues, and not target the poster. Talking about "apologists", "petulant childs", and "marxist unicorns" are unacceptable in civil discourse and on this forum. If people cannot stay in line with the forum and specifically the political thread guidelines, those individuals will lose the privilege of posting in these types of threads. This is not a partisan issue so do not assume this warning does not apply to one side or the other.

- Milnet.ca Staff
 

Fishbone Jones

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https://www.spencerfernando.com/2018/10/01/usmca-dont-fall-for-justin-trudeaus-deceptive-nafta-spin/

USMCA: Don’t Fall For Justin Trudeau’s Deceptive NAFTA Spin

"Avoiding total disaster is not the same as succeeding.

As predicted, the Trudeau government is claiming that the new NAFTA deal – now called the United States-Mexico-Canada-Agreement (USMCA) – is a ‘win’ for Canada.

They have to say this, and would have said exactly the same thing no matter what the agreement was.

Of course, that doesn’t mean it’s true, and we need to make sure we don’t fall for Justin Trudeau’s deceptive spin.

Consider what was said by Daniel Dale – who nobody could ever call a Trump apologist:

    “I’m hearing a bunch of this from Trump critics, but it’s not correct. There are numerous changes in the new agreement. Incremental changes but real changes, several of which are Canadian and Mexican concessions to Trump.”


More at Link
 

Remius

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Spencer Fernando has the cap on auto exports wrong.  The cap is an exemption should the US ever put tariffs on autos.  Essentially a level of security for Canada should that threat ever materialise.  Very much a plus for Canada. 

Aluminum and steel are still an issue.  But not NAFTA related. 

Rona Ambrose, James Moore, Brian Mulroney, Kim Campbell, Jason Kenney are only some of the conservatives applauding this deal.

Maybe conservatives like Andrew Scheer should highlight the conservative contribution to this deal instead of trying to make it sound like a disaster that isn’t really one.  I understand he owes the dairy industry but I don’t think that will translate to significant votes come election time.
 

Remius

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The Washington Post on the winners and losers. 

https://www.washingtonpost.com/business/2018/10/01/winners-losers-usmca-trade-deal/?utm_term=.1dda2f5d2ccb

A good overview.  Trump wins, Trudeau wins.  Mexico and China seem to be the bigger losers in this deal.
 

FJAG

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Remius said:
The Washington Post on the winners and losers. 

https://www.washingtonpost.com/business/2018/10/01/winners-losers-usmca-trade-deal/?utm_term=.1dda2f5d2ccb

A good overview.  Trump wins, Trudeau wins.  Mexico and China seem to be the bigger losers in this deal.

Sadly it's behind a pay wall.

:brickwall:
 

Rifleman62

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Here it is:

USMCA: Who are the winners and losers of the ‘new NAFTA’?
Trump and Trudeau can tout this as a major victory ahead of key elections in their countries. It’s a lot less clear whether ‘NAFTA 2.0’ is good for Mexico and U.S. automakers.

The United States, Canada and Mexico finalized a sweeping new trade deal late Sunday, just hours before their Oct. 1 deadline. President Trump was up early Monday tweeting that the agreement is “a great deal for all three countries,” and Prime Minister Justin Trudeau said Sunday night that it was a “good day for Canada.”

The deal is expected to take effect around Jan. 1, 2020. Congress has to approve it, a process that will take months, but confirmation looks likely, given that Republicans are pleased Canada got on board and some Democrats are pleased with the stronger labor provisions.

Here’s a look at who’s smiling — and who’s not — as the world sees this news. (For a rundown of what’s in the deal, click here).

Winners:
President Trump. He got a major trade deal done and will be able to say it’s another “promise kept” to his voters right before the midterm elections. And he won the messaging game — he persuaded Canada and Mexico to ditch the name “NAFTA,” for North American Free Trade Agreement, which he hated, and to instead call the new agreement “USMCA,” for United States-Mexico-Canada Agreement. It’s not a total trade revolution, as Trump promised, but USMCA does make substantial changes to modernize trade rules in effect from 1994 to 2020, and it give some wins to U.S. farmers and blue-collar workers in the auto sector. Trump beat his doubters, and his team can now turn to the No. 1 trade target: China.

Prime Minister Justin Trudeau. There might not be a lot of love lost between Trump and Trudeau, but in the end, Trudeau didn’t cave much on his key issues: dairy and Chapter 19, the treaty’s dispute resolution mechanism. Trudeau held out and got what he wanted: Canada’s dairy supply management system stays mostly intact, and Chapter 19 remains in place, a win for the Canadian lumber sector. On dairy, Canada is mainly giving U.S. farmers more ability to sell milk protein concentrate, skim milk powder and infant formula. On top of the substantive issues, Trump went out of his way to criticize the Canadian negotiating team in the final days of deliberations, which Trudeau can play up as a sign of just how hard his staff fought on this deal.

Labor unions. This agreement stipulates that at least 30 percent of cars (rising to 40 percent by 2023) must be made by workers earning $16 an hour, about three times the typical manufacturing wage in Mexico now. USMCA also stipulates that Mexico must make it easier for workers to form unions. The AFL-CIO is cautiously optimistic that this truly is a better deal for U.S. and Canadian workers in terms of keeping jobs from going to lower-paying Mexico or to Asia, although labor is looking carefully at how the new rules will be enforced. It’s possible this could accelerate automation, but that would take time.

U.S. dairy farmers. They regain some access to the Canadian market, especially for what is known as “Class 7” milk products such as milk powder and milk proteins. The United States used to sell a lot of Class 7 products to Canada, but that changed in recent years when Canada started heavily regulating this new class. USMCA also imposes some restrictions on how much dairy Canada can export, a potential win for U.S. dairy farmers if they are able to capitalize on foreign markets.

Stock market investors. A major worry is over, and the U.S. stock market rallied Monday with the Dow gaining nearly 200 points.

Robert E. Lighthizer. Commerce Secretary Wilbur Ross and Treasury Secretary Steven Mnuchin couldn’t get major trade deals done for the president, but U.S. Trade Representative Lighthizer did. He led negotiations with South Korea on the revamped U.S.-South Korea trade deal (KORUS) that the president just signed, as well as on the “new NAFTA.” Lighthizer is proving to be the trade expert closest to Trump’s ear.

Losers:

China. Trump is emboldened on trade. A senior administration official said Sunday that the U.S.-Canada-Mexico deal “has become a playbook for future trade deals.” The president believes his strategy is working, and he’s now likely to go harder after China because his attention won’t be diverted elsewhere (at least on trade matters).

U.S. car buyers. Economists and auto experts think USMCA is going to cause car prices in the United States to rise and the selection to go down, especially on small cars that used to be produced in Mexico but may not be able to be brought across the border duty-free anymore. It’s unclear how much prices could rise (estimates vary), but automakers can’t rely as heavily on cheap Mexican labor now and there will probably be higher compliance costs.

Canadian steel. Trump’s tariffs on Canadian steel and aluminum remain in place for now, something Trudeau has called “insulting” since the two countries are longtime allies with similar labor standards.

Unclear:
Mexico. America’s southern neighbor kept a trade deal in place, but it had to make a lot of concessions to Trump. It’s possible this could stall some of Mexico’s manufacturing growth, and it’s unclear whether wages really will rise in Mexico because of this agreement. Big energy companies can also still challenge Mexico via Chapter 11, something that could constrain Mexico’s new government as it aims to reform energy policies.

Ford, GM, Chrysler and other big auto companies. There’s relief among auto industry executives that the deal is done, but costs will be high for big car companies: The steel tariffs are still in place on Canada; more car parts have to come from North America (not cheaper Asia); and more car components have to be made at wages of $16 an hour. It remains to be seen how car companies are able to adjust and whether this has long-term ramifications for their bottom lines.

Big business. Many business groups are relieved that Trump got a trilateral deal and didn’t end up tearing up NAFTA entirely, as he had threatened to do. And they like a lot of the trademark and patent provisions. But the details of USMCA include some losses for big business. Some regulatory compliance costs will probably rise, especially for automakers, and big business lost Chapter 11, the investor dispute settlement mechanism that companies have used to sue Canadian and Mexican governments (the one exception is that energy and telecommunications firms still get a modified Chapter 11 with Mexico).


NOTE:  I was able to access the article without hitting a paywall.  Accordingly, I am leaving this post as is in accordance with the fair dealing provisions of the Copyright Act. -Milnet.ca Staff



 

Retired AF Guy

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From the Washington Post article:

USMCA also imposes some restrictions on how much dairy Canada can export, a potential win for U.S. dairy farmers if they are able to capitalize on foreign markets.

This is the first time I've seen this mentioned. Does anybody have any details?
 

FJAG

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Retired AF Guy said:
From the Washington Post article:

This is the first time I've seen this mentioned. Does anybody have any details?

The provision is found in Annex 3-B "Agricultural Trade Between the United States and Canada" in Part C "Dairy Pricing and Exports" on page 3-C-8 starting at para 7 which reads:

7. Canada shall monitor its global exports of milk protein concentrates, skim milk powder, and
infant formula and provide information regarding those exports to the United States as specified in
paragraph 12.
8.
(a) In a given dairy year, if the total global exports of milk protein concentrates and
skim milk powder from Canada exceed the following thresholds:
Year MPC plus SMP Thresholds
1 55,000 MT
2 35,000 MT
then, Canada shall apply an export charge of CAD 0.54 per kilogram to global
exports of these goods in excess of the thresholds set out above for the remainder of
the dairy year.
(b) In a given dairy year, if global exports of infant formula from Canada exceed the
following thresholds:
Year Infant Formula Thresholds
1 13,333 MT
2 40,000 MT
then, Canada shall apply an export charge of CAD 4.25 per kilogram to global
exports of these goods in excess of the thresholds set out above for the remainder of
the dairy year.
9. With regard to the thresholds established in paragraph 8(a) and 8(b), after Year 2 each
threshold shall increase at a rate of 1.2 percent annually on a dairy year basis.
. . .

https://ustr.gov/sites/default/files/files/agreements/FTA/USMCA/03%20Agriculture%20US-CA%20Annex%20clean.pdf

I'm not so sure if that this is a limitation/restriction but rather a requirement to add an "export charge" on quantities over the prescribed amounts. I won't pretend to analyze what this effectively means to the industry.

:cheers:
 

kratz

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ref: CTV.ca

I'm glad NAFTA remains in place, vice the agreement we were cornered into with USMCA.

Trump 'messed up the clock' on USMCA, current form 'dead': former U.S. ambassador
Published Sunday, May 5, 2019 7:00AM EDT

OTTAWA – U.S. President Donald Trump has "messed up the clock" on getting the renegotiated NAFTA deal ratified, and it may now die in its current form, says former U.S. Ambassador to Canada Bruce Heyman.

In an interview on CTV's Question Period, Heyman said that the deal in its current form is dead.

more at link.
 
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