U.S.-Mexico-Canada’s ratification chances get slimmer

The chances of the United States–Canada–Mexico Agreement being ratified before the next Canadian federal election have likely slumped after a new American commission report found the deal would have a moderate impact on the American economy .

The U.S. International Trade Commission (ITC) released its highly anticipated analysis of the pending trade agreement on April 18.

It found the deal, upon ratification, would have a moderate impact on the American economy overall after considering eight of the deal’s key provisions, including agriculture, automobiles, labour, and cross-border services.

Canada, the U.S. and Mexico reached agreement on a proposed USMCA at the end of September, but Canadian officials have said it is unlikely Canada will ratify the trade agreement until U.S. steel and aluminum tariffs are removed.

The federal government imposed more than $16 billion in retaliatory tariffs on a host of American products last Canada Day in protest of the tariffs, and Canadian officials have since said Canada is looking at expanding the list.

That expanded list, officials have said, could include more targeted tariffs on American agricultural goods. Canada’s current retaliatory list does not include any U.S primary agriculture.

Another factor affecting the USMCA ratification prospects is Canada’s upcoming federal election.

With about five weeks left in the parliamentary sitting calendar, the likelihood of Canada passing the trade deal before it rises for its summer recess is slim.

South of the border, several high-ranking Democrats have said they want changes to the USMCA, a position that, based on initial reactions from Democrats on Capitol Hill, has likely been bolstered thanks to the ITC’s moderate findings.

“This report confirms what has been clear since this deal was announced — Donald Trump’s NAFTA represents at best a minor update to NAFTA, which will offer only limited benefits to U.S. workers,” Senate finance committee ranking member Ron Wyden said in a statement.

“As I’ve said for months, the administration shouldn’t squander the opportunity to lock in real, enforceable labour standards in Mexico and fix the enforcement problems that have plagued NAFTA.”

As for the agriculture industry, the ITC found that it would grow under the pending USMCA, but at a lesser rate than other sectors, mostly because agricultural trade under the existing NAFTA is already duty free.

One agricultural area that could see some trade growth, the report noted, was in the dairy, poultry, wheat and alcoholic beverage sectors. New sanitary and phytosanitary provisions were also expected to help bolster trade within North America.

On dairy, the ITC cautioned the American dairy industry would see “small gains in market access for the U.S. dairy sector upon implementation of USMCA, with small export gains contributing to limited positive impacts on dairy production and employment.”

Increased dairy exports to Canada would likely be driven mostly by goods like cheese and other milk and cream products, the report said.

If all new quotas for dairy products were filled, the ITC estimated the increased access to Canada’s dairy market would be worth about $230 million, using 2017 prices.

As for poultry, the report found USMCA “would provide additional access or clarify the level of access to the Canadian import markets for U.S. poultry, eggs, egg products, and hatching chicks and eggs. U.S. products already claim the majority share of Canadian imports of most of these products.”

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