Canada agreement eliminates Class 7 dairy, includes more market access
October 1, 2018
The agreement that the United States reached with Canada Sunday evening to include Canada in a new U.S.-Mexico-Canada trade agreement includes the elimination of Canada's Class 7 dairy program, and also increases market access for U.S. dairy products in Canada, Trump administration officials told reporters in a briefing late Sunday.
Class 7 covered the ultrafiltered milk that U.S. dairy producers had been exporting to Canada before Canada's adoption of the Class 7 grade of dairy products. Class 7 was the biggest irritant to U.S.-Canadian dairy relations.
Canada has also agreed to change policies that led it to export disproportionately, the officials indicated
The agreement also includes increased access to the Canadian dairy market that is better than what the Obama administration negotiated in the Trans Pacific Partnership agreement, a senior administration official said.
The dairy provisions were not included in exchange for any other specific provisions in the agreement, according to an official.
The agreement will be called the U.S.-Mexico-Canada Agreement and those terms will replace the North American Free Trade Agreement, an official said.
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The agreement, including the provisions with Mexico, are the "fulfillment" of one of President Donald Trump's most important goals and will constitute the template for other trade agreements that the administration hopes to sign.
The agreement does not include any changes to the tariffs that the United States has imposed on Canadian and Mexican steel and aluminum, an official said. That issue is proceeding on a separate track, with the Commerce Department in charge.
The officials said the trilateral agreement would be published today so that the three governments could sign the agreement by the end of November, when the current Mexican administration leaves office. But it will be up to the next Congress to approve the agreement, the officials said.
Trade Representative Robert Lighthizer and Canadian Foreign Affairs Minister Chrystia Freeland said in a joint statement, "Today, Canada and the United States reached an agreement, alongside Mexico, on a new, modernized trade agreement for the 21st Century: the United States-Mexico-Canada Agreement."
"USMCA will give our workers, farmers, ranchers and businesses a high-standard trade agreement that will result in freer markets, fairer trade and robust economic growth in our region," the statement said. "It will strengthen the middle class, and create good, well-paying jobs and new opportunities for the nearly half billion people who call North America home.
"We look forward to further deepening our close economic ties when this new agreement enters into force," the statement said. "We would like to thank Mexican Economy Secretary Ildefonso Guajardo for his close collaboration over the past 13 months."
Senate Finance Committee Chairman Orrin Hatch, R-Utah, said in a news release, "I am pleased that the Trump administration was able to strike a deal to modernize NAFTA with both Mexico and Canada."
"NAFTA is a proven success for the United States, supporting more than 2 million American manufacturing jobs and boosting agricultural exports to Canada and Mexico by 350 percent," Hatch said.
"Maintaining a trilateral North American deal is an important prerequisite to preserving and extending those gains and the Trump administration has achieved that goal. I look forward to reviewing this deal to confirm it meets the high standards of Trade Promotion Authority."
House Ways and Means Committee ranking member Richard Neal, D-Mass., said, "Last month, I noted that a lot of important work remains to be done in the NAFTA renegotiation. That is still true today.
"I welcome the announcement by the administration that the deal now includes Canada. But our collective examination of the deal will be beginning only now, with the administration's publication of new NAFTA text.
"There are important questions that members of Congress, stakeholders, and the American people need answered," Neal said.
"Most importantly, we will need to assess whether this agreement makes real improvements to the terms of the existing NAFTA or President Obama's TPP, especially when it comes to the enforcement and enforceability of the agreement's provisions, including the provisions that have always been critical to Democratic support — the ones that provide for worker rights and environmental protections.
"The bar for supporting a new NAFTA will be high. NAFTA has had many critics over the years and its flaws are well-known. Like me, many of my colleagues did not support the deal originally. And those who did will have serious questions that they need answered before doing so again."
House Ways and Means Trade Subcommittee ranking member Bill Pascrell Jr., D-N.J., said, "I have been a vocal critic of the NAFTA agreement since I entered Congress."
"Fixing NAFTA means fixing it for all three countries of the North American continent," Pascrell said. "Today, as the administration publishes new NAFTA text, the administration is announcing that it now also has agreed terms with Canada. This means we are all seeing what the administration calls a full deal for the first time right now.
"After more than two decades of little action, I look forward to scrutinizing the new NAFTA deal that the administration has promised will finally 'rebalance' the agreement. In my view, the first step to fixing NAFTA's flaws is to address inadequate Mexican labor standards.
"I'm particularly interested in reviewing the details of the labor chapter and labor annex with Mexico and whether this agreement holds out the promise for creating jobs and raising wages for Mexican and American workers. I am not interested in supporting a new deal that has all of the flaws of the old deal baked into it.
"As we look to remaking the rules for the future economy, American workers, families, and companies deserve something much, much better."