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The Big Story: Happily ever NAFTA?

Last Updated Oct 2, 2018 at 10:59 am PDT

US President Donald J. Trump (L) and Canada's Prime Minister Justin Trudeau (R) shake hands during the Welcome Ceremony at the G7 summit in Charlevoix, Canada, 08 June 2018 (reissued 01 October 2018. Canada and the United States on 30 September struck a trade deal to replace the North American Free Trade Agreement (NAFTA) with the new United States-Mexico-Canada Agreement (USMCA). EPA/NEIL HALL / POOL
Summary

'It kind of got nasty,' says Parliament Hill reporter Cormac MacSweeney, looking back on the 15-month process

The de minimis threshold: What it is and how it will affect the average Canadian

There’s a new trade deal, but what does that actually mean outside the political bubble? If you’re Canadian, how will your wallet handle the new NAFT-sorry, the new USMCA?

What’s next for the industries that stood to lose or gain thousands of jobs and billions of dollars depending on the final text? And has the intense 15-month process, which included threats, insults, retaliatory tariffs and a whole lot of rhetoric permanently damaged relations between Canada and the United States?

Donald Trump and Justin Trudeau made nice, but there’s no question all will not be forgotten.

Cormac MacSweeney, Parliament Hill reporter for CityNews and Rogers news radio stations across the country, joined the Big Story podcast to show us what time might reveal about this agreement, a few lesser-known clauses that we might end up very familiar with, and takes us on a little trip along a very bizarre memory lane.

“It appears that things are getting off on a better foot,” says MacSweeney. “Let’s remember President Trump was calling Justin Trudeau dishonest and weak, and took many shots at Canadians throughout these negotiations.”

But when the deal was done and Trump spoke from the White House on Monday, he complimented Trudeau.

“There was a lot of tension, I will say, between he and I, I think more specifically,” said Trump. “It’s all worked out.”

“He’s a good man. He’s done a good job and he loves the people of Canada,” he added.

You can hear the full episode and subscribe to The Big Story podcast on iTunes or Google Play.

You can also hear it online at thebigstorypodcast.ca.

When Trudeau was asked about how the renegotiations may have strained relations with the U.S., he said there were some challenges, but he’s more focused on moving forward.

“It’s going to be getting better,” says MacSweeney. “I think the fact that this is one of the biggest strains that we’ve had with the U.S. in ages, now that this is being put behind us — not quite yet, not everything is done — but with the bulk of that work behind us know, it seems like things might get a little bit better.”

How is the USMCA different from the NAFTA deal?

“There aren’t many drastic changes that would fundamentally change the economic relationship that we have with the United States,” says MacSweeney, who notes there are a lot of “tweaks.”

“It’s not just the same old NAFTA. We are seeing changes in terms of autos that could potentially benefit Canada. We are seeing some concessions made, such as with the dairy sector — one key focus that’s been in the media and headlines for awhile now — where we’re giving up some of our market to United States farmers. That’s creating a lot of domestic political headaches for the Trudeau government.”

He adds “it’s not what it could have been.”

“There were some pretty drastic proposals on the table that never ended up coming to fruition with these negotiations. So, not as bad as it could have been.”

 

How does the USMCA affect the average Canadian?

“The de minimis threshold — you may be asking ‘What the heck is that?” says MacSweeney.

“Anytime you want to buy something from the United States — let’s say you’re online shopping with Amazon… You have to pay duties on the products that come from the United States into Canada, and vice versa. The threshold is the dollar figure at which you have to pay those duties.

“When NAFTA was first negotiated, that dollar figure was $20. You can barely buy anything online for less than $20 and make it worth your while, nowadays. Now, you can do your cross-border and online shopping and buy up to $150 worth of goods before you would have to pay duties on that.”

He also thinks Canadians will notice changes with regard to pharmaceutical drugs and the patents around them.

“It’s extending it from eight years to 10 years before generic drugs can come in and start reproducing the drugs. Where you’ll feel this is just in terms of the cost of what you pay for your pharmaceutical drugs. It’s something that the NDP and the Conservatives have jumped on because it seems like it would benefit big U.S. pharmaceutical companies — not so much here in Canada — and it’s the people who will feel the difference.”

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How the USMCA will affect our region remains to be seen

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B.C. wine and dairy industries worried about future under USMCA

MacSweeney points out there was an expectation that the U.S. would drop steel and aluminum tariffs and our counter-duties would disappear.

“That hasn’t been the case, yet. That wasn’t part of this deal. The steel and aluminum industries are saying that this is basically a sellout. They don’t understand how [they] didn’t nab a USMCA deal without actually getting the assurances that those tariffs would be gone.”

He adds there are some suggestions that the U.S. will work towards that, but there’s no guarantee.

“The one thing we do know is those auto tariffs that President Trump had been threatening — which would have been really bad for the economy — those are off the table with this agreement.”

It’s been a long 15 months

MacSweeney thinks there was a strain on the relationship between Canada and the U.S. “We sort of took a number of steps back. We’ll see how many steps we can take forward with this current president in place.”

“I was there at the White House when Prime Minister Trudeau went to meet President Trump for the first time. In their closing news conference, Trump was talking about the Mexicans — and how he wanted them to pay for the wall — and the auto sector. With Canada, it was just going to be little tweaks.

“Everything seemed to be going well, until Donald Trump decided we were the enemy. He went all-out with his attacks on Canada, his attacks on the prime minister, his attacks on Foreign Affairs Minister Chrystia Freeland, as well — saying he didn’t really like our trade representative. It kind of got nasty.”

He thinks we’ll have to wait and see where the relationship goes from here. “Maybe we will see them cosy up a little bit more, but highly doubtful, given everything that’s happened… But regardless of who’s been in the White House and who’s been in the Prime Minister’s Office, we’ve always seen Canada and the U.S. work through any differences.”

“I think it’s a relationship that neither side can really afford to have collapse.”