New North American free trade deal comes into effect

In terms of auto industry, all three countries technically win with revisions made to the "rules of origin" for vehicles where the percentage of North American-made material in cars has been increased from 62.5 percent to 75 percent.

By Author  |  Published: 2nd Jul 2020  9:43 amUpdated: 2nd Jul 2020  10:03 am
North American free trade deal

Ottawa: A new trade deal between the United States, Canada and Mexico came into effect on Wednesday. Canadian Prime Minister Justin Trudeau told reporters on Monday that Canadians would get more from the new deal, which replaced the 26-year-old North American Free Trade Agreement, Xinhua news agency reported.

In terms of auto industry, all three countries technically win with revisions made to the “rules of origin” for vehicles where the percentage of North American-made material in cars has been increased from 62.5 percent to 75 percent.

There is also a requirement for automobiles to feature 70 per cent North American steel and aluminum content, but that clause could become an irritant.

Last year, the US removed tariffs of 25 per cent on imports of Canadian steel and 10 per cent on Canadian aluminum imposed in 2018 following an agreement with Canada, which responded with countermeasures against American steel and aluminum products.

The new agreement, however, would allow the United States to reintroduce similar tariffs, if imports of Canadian steel and aluminum spike.

Trudeau reminded Washington that the United States “needs” Canadian aluminum.

“If they put tariffs on Canadian aluminum, they’re simply increasing the costs of inputs, necessary inputs, to their manufacturing base which will hurt the American economy. Again, we see that our economies are so interlinked that punitive actions by the United States administration end up hurting Americans the same way they end up hurting Canadians,” Trudeau said.

“We will continue to advocate for continued free and fair trade between our two countries in a relationship that has been extraordinarily beneficial to our two countries for many, many decades,” Trudeau added.

Trudeau’s remarks came after a report last week that the United States plans to re-impose a tariff of 10 per cent on Canadian aluminum into the United States unless the Canadian government agrees to limit aluminum exports.

US trade representative Robert Lighthizer said in testimony to the Senate Finance Committee earlier this month that recent surges in steel and aluminum exports from Canada were contrary to the agreement that ended the year-long stalemate in May 2019.