It has now been several months since NAFTA renegotiations have been completed. After several months of tension, these renegotiations led to an agreement between Canada, the United States and Mexico on September 30, 2018. A few weeks later, the three parties involved signed a new version of NAFTA, which Canada subsequently renamed the “Canada-United States-Mexico Agreement” (CUSMA). The three countries now need to ratify the revised agreement so it can come into force. As we approach the end of Canada’s parliamentary session, companies and workers concerned with the conclusion of this agreement are all asking the same question: will the CUSMA be ratified soon?
Section 232 tariffs on Canadian steel and aluminum
When CUSMA was signed, Canada failed to secure a major concession from the United States, that is the removal of Section 232 tariffs imposed on certain Canadian steel and aluminum products. This is a matter that the Trudeau administration seems to want to resolve with the Trump administration before ratifying the agreement. In that sense, Foreign Affairs Minister Chrystia Freeland recently stated that she did not understand how it was possible for these tariffs to remain in place, even though a new agreement was signed between the three countries.
Furthermore, Canadian aluminum companies believe that the tariffs imposed on Canadian products have resulted in significant revenue losses. For these Canadian companies, it is clear the tariffs imposed by the U.S. government must be eliminated before Canada ratifies the CUSMA. It should be noted that Canada has also imposed tariffs on a variety of U.S. products, including steel and aluminum products, as a retaliatory measure following the imposition of tariffs by the United States.
On the Mexican side, the government also indicated that it would not ratify the new agreement without the elimination of tariffs imposed by the United States on Mexican steel and aluminum products. Moreover, several U.S. Democrats have asked Mexico to improve its labour standards, otherwise they would not approve the new agreement. The Mexican government subsequently announced that it would introduce a bill to reform its labour standards by April 30. It should be recalled that since the mid-term elections, U.S. Democrats are the new majority in the House of Representatives.
No precise ratification date in sight
For the new agreement to enter into force, the three parties must ratify it. The Trudeau administration has until the end of the present parliamentary session, in June, to introduce a bill to implement the CUSMA.
After June, parliamentary business will be adjourned until an election is called, which could result in the new agreement being ratified only in 2020. Moreover,itshould also be considered that the U.S. Elections, which are just around the corner, may defer the U.S. ratification of the agreement pending the outcome of these elections.
On the other hand, it should be noted that several U.S. economic players want the ratification of the CUSMA to happen quickly. An advertising campaign for The Pass USMCA Coalitionwas recently launched to encourage U.S. representatives of Congress to ratify the agreement without further delay. President Trump is also encouraging representatives to ratify the new agreement, which is, according to him, a guarantee of economic prosperity for the United States.
In conclusion
If NAFTA renegotiations leading to the signing of the CUSMA have been long and arduous, ratification of the revised agreement might also take just as long. Note that until the three countries ratify the agreement, NAFTA will remain in effect. All in all, we hope a conclusion on the CUSMA case will be announced soon so that companies here will finally know where they stand!
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