Canadian Prime Minister Justin Trudeau is getting a mixed but generally positive reaction in his own country to the outcome of the past year’s trade dispute with the Trump administration. While few view the deal as a huge win, the emerging consensus is that Trudeau steered Canada clear of a disaster by preventing the destruction of the North American Free Trade Agreement framework, now dubbed the U.S.-Mexico-Canada Agreement, or USMCA.
“The early reaction has been pretty positive given the threats that are there on the table and the worry about NAFTA disappearing,” said Edward Alden, senior fellow at Council on Foreign Relations and former Washington bureau chief for the Financial Times. “The Canadians were able to preserve [the framework of] NAFTA and the concessions were fairly modest. We’ll see what the response is in Quebec and Ontario over dairy. It’s small numbers but politically sensitive.”
Trudeau is already feeling pressure. His Liberal Party government lost an election in Quebec Monday when the rival center-right party Coalition Avenir Quebec won the right to form the next majority government in that province, the first time the Liberals were ousted in 15 years.
In announcing the deal Monday, Trudeau characterized it as a decent compromise. “We never believed that it would be easy, and it wasn’t, but today is a good day for Canada,” he said.
The deal obligated Canada to roll back two dairy price support programs as well as open up its markets to more dairy imports. The move is expected to allow U.S. producers to gain 3.6 percent of the Canadian market, up from the 3.25 percent that had previously been negotiated under the Trans-Pacific Partnership deal, which Trump pulled the U.S. out of.
Canada also raised the threshold it used to put duties on cross-border purchases to 150 Canadian dollars, up from $20 previously. Furthermore, Canada made concessions on biologic drugs, extending the “data protection” period — the time when they are granted market exclusivity — to 10 years, up from eight.
[Opinion: From NAFTA to USMCA, Trump just got a win for America]
In exchange, Canada primarily got President Trump to back down from his broader threats to change the NAFTA framework. This included dropping a plan to scrap the Chapter 19 dispute-resolution section regarding anti-dumping and countervailing duty decisions. Canada views the section as essential to maintaining some of its economic policies. It also got the Trump administration to agree to a 16-year sunset provision for the entire deal, up from the six years the administration wanted.
Most Canadian stakeholders said that they had braced for something worse, mainly the fear that NAFTA would be split into two bilateral deals. “An imperfect deal is better than no deal,” Dennis Darby, president of the Canadian Manufacturers and Exporters, told the Toronto Star, because it “ends the uncertainty.”
The Toronto Star editorialized: “In the end, for Canada, it came down to making a few acceptable concessions in order to keep the most important aspects of NAFTA in place and win guarantees in key areas, including autos and culture.”
Some noted that the deal may also benefit Canada’s auto industry since it prevented potential tariffs from being applied to Canada. “The United States-Mexico-Canada Agreement will continue to provide our members — which have a footprint in all three countries — with preferential access to the U.S. market. Importantly, the agreement also provides protection for Canada’s automotive industry from U.S. 232 national security tariffs,” said David Adams, president of Global Automakers of Canada.
The main criticism was that the deal did not address a separate trade issue: The Trump administration placing tariffs of 25 percent on all steel imports and 10 percent aluminum ones. Canada was initially exempted from them, but that was removed by the Trump administration to place further pressure on Canada in trade talks. That the tariffs were justified by the Trump administration on national security grounds was an added insult to many Canadians, their country being a long-standing U.S. ally.
“The Canadian government sold out Canadian steel and aluminum workers. So much for the ‘win-win-win’ deal promised by this government,” said Ken Neumann, Canadian director of the United Steelworkers.
Trudeau said Monday that addressing tariffs was on top of their U.S. to-do list now that the NAFTA-related talks are over.
