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Tuesday, 2 October 2018

US and Canada agree on new trade pact

US and Canada strike new trade pact: The US and Canada made their Sunday night deadline, reaching a breakthrough in negotiations over a new trade agreement to replace the 1994 North American Freetrade Agreement (NAFTA). Mexico and the US had agreed in August to renegotiate the terms of the NAFTA, but Canada remained on the fence for weeks. The new agreement, which will be known as United States-Mexico-Canada-Agreement (USMCA), will take effect gradually, with most of its key clauses set to start still by 2020

So what’s in the new agreement? Apart from the new name, “the goal of the new [agreement] is to have more cars and truck parts made in North America.” As of 2020, only vehicles with at least 75% of their components manufactured in one of the three countries will be privy to zero tariffs. Restrictions have also been placed on the wages that workers manufacturing these cars earn. The agreement will also see Canada open up its dairy market to farmers in the US and keeps at bay a steep 25% tariff on steel imports which President Donald Trump had imposed. The Washington Post has the full rundown.

The agreement was met with “relief rather than enthusiasm,” both the Financial Times and Wall Street Journal are saying, noting that the move provides a respite to investors and businesses, who are already grappling with the uncertainty from the US’ stance on China. The New York Times, CNN, and Canada’s Globe and Mail also have coverage.

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