The USMCA is signed. Now what?

By the time the ink dried on the signing of the USMCA this morning by Prime Minister Justin Trudeau, outgoing Mexican President Enrique Pena Nieto and U.S. President Donald Trump, it was already unravelling.

After the announced loss of 2,500 autoworker jobs at the General Motors plant in Oshawa and many more at plants in the U.S., Trump had already threatened tariffs on cars coming from Mexico as retaliation against the company. Senator Elizabeth Warren has said she will not be supporting the agreement when it comes to a vote in the Senate. 

”For decades, the leaders of both parties preached the gospel that free trade was a rising tide that would lift all boats,” she said. “Great rhetoric – except that the trade deals they negotiated mainly lifted the yachts—and threw millions of working Americans overboard to drown”

The Canadian Dairy Farmers and the Steelworkers were urging the government not to sign until the government ensured that the U.S. would not have oversight over Canadian dairy exports and that steel tariffs were removed.   

And then, lawyers raced around the clock to finish the incomplete agreement, which is still being changed.

With CETA, the Comprehensive Economic and Trade Agreement between Canada and the European Union, we witnessed many signings.  The agreement was tweaked, went through legal scrubbing where negotiators tried to remove objections to the agreement—without success.  I suspect this will not be the last signing.

For one, it has to pass the U.S. Congress.  There, in the House of Representatives, newly empowered Democrats are determined to make their stamp on the agreement.   Already, the Democratic candidate for Speaker of the House, Nancy Pelosi, has argued that there needs to be changes to labour and environmental language in the deal. Some Republicans have objected to LGBTQ language in the agreement (not to be confused with enforceable rights).  While some Republicans have asked for a vote in the lame duck session before the House of Representatives returns with a new Democratic majority, this is not likely to happen.  What is more probable is that it could be reopened, as Scott Sinclair, veteran trade expert with the Canadian Centre for Policy Alternatives, has noted, by opening the text, or adding “interpretive side letters and/or new assurances about how the deal is to be implemented in each country.”

Which is why we at the Council of Canadians believe the agreement was in no state to be signed. 

As Council of Canadians honorary chairperson Maude Barlow said, “This is an agreement with major implications, not a grocery list written on a napkin. With so much political uncertainty and so many poison pills in the agreement, it is better to nail down a complete agreement rather than deal with an agreement that is still in flux. Signing the agreement as is would be giving a blank cheque to Donald Trump. There are glaring problems with the agreement."

I added: “The agreement is one step forward, two steps backward. We are encouraged that some of our historic demands dating back 30 years have finally been addressed. The Council of Canadians was among the first to draw attention to how Chapter 11 would harm our ability to bring in public interest policy and legislation. Now, it is gone—at least between Canada and the U.S., But in the closed-door negotiation of the USMCA, corporations came up with new rights: powers for corporations to monitor and change regulations before they see the light of day in areas that could affect food safety, chemicals, environmental regulations and other matters of public safety. The agreement also supports higher drug prices because of Big Pharma protectionism, and it allows attacks on farmers and Crown corporations. Again, free trade in its current form is a goody bag for corporations.”

Tomorrow, there will be a new Mexican president, the progressive-leaning Andrés Manuel López Obrador, who has done his best to avoid everything relating to USMCA and NAFTA. 

American democrats may succeed in demanding environmental and labour rights and have even said they would curtail pharmaceutical companies’ provisions which could raise drug prices.  But they are unlikely to fix other glaring holes: assuage the attacks on our dairy farmers, who will have to give up almost 3.6 per cent of their market to U.S. dairies. The deal also caps  Canadian dairy exports to the rest of the world.

The Congressional ratification is unlikely to deal with regulatory cooperation which is a whole myriad of rules empowering corporations to participate in how countries regulate.  These provisions give business newfound mechanisms to challenge public health and safety regulations. It will probably do nothing to deal with restrictions on crown corporations.  Nor will it remove the steel tariffs unilaterally imposed by the U.S,  NAFTA, USMCA and WTO be damned.

So, while, we can have some hope that the next Congress will make some changes, we need to ensure that Canada also defends our interest during this process of reopening and re-evaluating this agreement. Remember: it will need to be ratified in Canada probably in the 2019 election year.

In the present agreement, we have already changed Chapter 11, and energy proportionality.  We can change this too. 

For our USMCA quick cheat sheet, see: https://canadians.org/blog/good-bad-and-ugly-nafta-20

Photo: U.S. Department of State, Flickr Media Commons.