North American trade deal signed at G20 summit

The leaders of the US, Canada, and Mexico sign the USMCA trade treaty.

US and Canada currency
Source: Bloomberg

The leaders of the US, Canada, and Mexico recently signed a new trade agreement at the G20 summit. The deal took two years to finalise and will last 16 years.

NAFTA out, USMCA in

US President, Donald Trump, Canadian Prime Minister, Justin Trudeau, and Mexico’s president, Enrique Pena Nieto, signed the US-Mexico-Canada Agreement (USMCA). This treaty is meant to replace the North American Free Trade Agreement (NAFTA) that was signed in the 1990s.

The deal is supposed to promote fair and equitable trade among the three nations. The US gains access to Canada’s dairy industry through its exports, which will help US dairy farmers. Canada gets a provision that allows companies to request arbitration if they feel they have been affected by tariffs they deem unfair. Mexico increases wages for its auto workers because car parts must be assembled by workers earning $16 an hour. That amount is much higher than Mexico’s typical hourly pay. All the North American leaders praised the agreement.

‘We worked hard on this agreement. It's been long and hard. We've taken a lot of barbs and a little abuse and we got there. It's great for all of our countries,’ said Trump.

Trudeau said the deal will ‘enhance competitiveness and prosperity, while creating new jobs.’

Nieto said the treaty is a ‘win -win -win’ for all three nations.

USMCA controversies

Though the treaty is supposed to look to the future, some critics of the deal contend that USMCA is stuck in the past.

Lori Wallach, director of Public Citizen's Global Trade Watch, said the agreement ignores action on climate change and protecting the environment.

‘Unless there are strong labour and environmental standards that are subject to swift and certain enforcement, US firms will continue to outsource jobs to pay Mexican workers poverty wages, dump toxins and bring their products back here [in the US] for sale,' said Wallach in a statement.

The deal still has to be approved by the US Congress, and many members of Congress want to add their input into the agreement.

‘Thankfully, the Congress has a role in crafting 'implementing legislation' to make sure the deal benefits and protects middle-class families and working people, and isn't simply a rebranding of the same old policies that hurt our economy and workers for years,’ said US Senate Minority Leader, Chuck Schumer.

Congress will review the agreement when the new session convenes in January.

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