Of Plans, Cows and Automobiles

This a very important moment for the North American Subcontinent since, as of last night, all three countries in the region have approved and signed the preliminary documents of the “United States, Mexico and Canada Agreement” (USMCA). This new plan has effectively replaced the North American Free Trade Agreement (NAFTA), which some critics had come to see as a chaotic “free for all” plan, with unforeseen and disadvantageous results for each country, in different aspects.  The new plan has a more Spartan approach, in which trade will not have absolute open borders, and hence the need to drop the word “free” from the title.  Such restrictions, however, have allowed each country to harvest concessions in others aspects of the deal, considered vital to keep the three countries together at the table.  For Canada and the United States, the dairy industry was the focus of heated arguments, threatening to sour the deal; in the end, Canada has agreed to soften its protectionist programs to allow more access to the overflowing American dairy market into the country.  In return, Canada was able to keep the Arbitration Clause (the infamous Chapter #19) in place.  All three countries have heavy interests at stake in the steel, aluminium and auto industries, and it was important not to interrupt the current trading logistics of materials, parts and finished products; although the new agreement has placed caps on how much can cross both American borders, these limits seem way above current production and projections.  Mexico managed to negotiate an extended “Sunset Clause”, also central to the success of the negotiations, from a five-year expiry period as proposed originally by the US, to sixteen years, with the agreement renewable after up to six years of negotiations.

The USMCA might present a lot of issues in the near future, from tariffs and specific aspects such as rising drug prices, copyright and cultural ownerships, to the tidal wave effects in international markets.  This might make the deal look as a small glade in a forest of obstacles, but it is an opening nevertheless,  and I believe that we can now picture “Los Tres Amigos” – Mexico, the United States and Canada eventually holding hands once more, walking together into the sunset (although I confess I am still unsure what kind of pun I intended with this last one!)

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2 thoughts on “Of Plans, Cows and Automobiles

  1. I was not a fan of NAFTA and thought it was a crappy deal for us when it was made in the first place. I hate admitting that anything Trump does is good, but this is a better deal for our three nations.

    I don’t think we’ll have such great luck pushing China around, though. You sort of need to know your limits and NO ONE pushes China. Not in many long centuries.

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    1. NAFTA ran its course. From my point of view, most of the credit for the USMCA should go to the negotiating teams from the three countries (and if it is any consolation, Republican George H.W. Bush was president when NAFTA was originally signed, and president Obama expressed his interest in re-negotiating trade deals, including NAFTA, in several instances during his term.)

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