It’s A Small World NAFTA All 🌎

 Chip Somodevilla / Getty Images

Chip Somodevilla / Getty Images

The Art of the (New) Deal

The US, Canada, and Mexico have reached an agreement to replace NAFTA - a trade agreement in place since the 90s. The new deal, called the US Mexico Canada Agreement (USMCA), will be easier to implement and focuses on putting 'America First', according to the Trump administration. Senate Minority leader Chuck Schumer (D-NY) voiced his support for the new deal.

NAFTA 101

NAFTA, the North American Free Trade Agreement, went into effect on January 1, 1994 under Bush Sr.’s administration. The agreement lifted tariffs (taxes on imports/exports) on almost all goods traded between the US, Canada, and Mexico – enabling companies in the three countries to do business across borders.


WINNING DEAL:

Fox News: Trump has just revolutionized global trade by replacing NAFTA with USMCA

The Hill: Trump's 'America First' policy scores a big win with new NAFTA deal

Outlets who consider the new deal a win label it a political victory for Trump prior to the midterm elections. They believe Canada is succumbing to Trump’s demands. They outline that even though Canada got some wins in the deal, overall the agreement is a bigger win for the US.  Furthermore, they state that NAFTA was the most hated trade agreementin US history and that the new deal is a turning point for American jobs and global power.

SAME DEAL NEW NAME:

Bloomberg: Trump’s New Nafta Pact Looks More Like a Rebranding Than a Revolution

The Washington Post: Trump makes minor trade deal, declares world-historic victory

Outlets hating on the deal highlight that it is not that different from NAFTA. They state that NAFTA merely served as a talking point for Trump. They view the new deal as merely a combination of NAFTA and parts of the Trans-Pacific Partnership(which Trump pulled out of). Moreover, they claim that the new deal will not have a significant impact on the economy and that Trump was forced to close a deal due to political and economic realities.


So what's new with USMCA?

Regardless of the rhetoric surrounding the USMCA deal, there are some changes compared to NAFTA. The changes are focused around the automotive manufacturing tariffs, export of American dairy products to Canada, Canadian copyright laws, enhanced drug patent protections in Canada, and changes surrounding dispute resolution. How these changes will impact the American economy remains to be seen.

Win-win situation

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