Following Senate approval, Trump signs USMCA Implementation Act

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As expected, U.S. President Donald Trump signed the United States-Mexico-Canada Agreement (USMCA) Implementation Act on Wednesday, moving the trilateral trade deal a step closer toward replacing the 1994 North American Free Trade Agreement (NAFTA).

“And today, we’re finally ending the NAFTA nightmare and signing into law the brand-new U.S.-Mexico-Canada Agreement,” Trump said during the signing ceremony Wednesday.

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Late last year, the White House and House Democrats reached a deal on revisions to the proposed NAFTA replacement, allowing the deal to push through the Democrat-majority House.

Meanwhile, the USMCA moved through the Senate quickly, receiving approval by an 89-10 vote earlier this month.

Trump, who has called NAFTA the “worst trade deal ever,” hailed the deal on Twitter, calling it a “massive win for American manufacturers and auto workers.”

Sen. Chuck Grassley (R-Iowa), the chairman of the Senate Finance Committee, praised the deal and hoped for a swift approval by Canada.

“The next step is for Canada to ratify USMCA,” Grassley said in a prepared statement. “I support Prime Minister Trudeau’s objective to ratify USMCA ‘as quickly as possible.’ Once Canada has ratified the agreement, the Trump administration will work with Canada and Mexico to ensure all parties will be able to carry out their USMCA obligations so the agreement can enter into force.”

Mexico’s Senate approved the revised deal in December. With approvals from the U.S. Congress and Trump, Canada is the only remaining party yet to approve the deal. All three legislatures must approve the deal before it can go into force.

Among other provisions, the deal raises the regional value content for automobiles to qualify for tariff-free imports from 62.5% under NAFTA to 75%. In addition, the agreement calls for at least 40-45% of automotive parts to be manufactured by workers making at least $16 per hour — a provision aimed at closing the wage gap between U.S. (and Canadian) workers and their Mexican counterparts.

Earlier this month, Canadian Prime Minister Justin Trudeau urged ratification “as quickly as possible,” Reuters reported.

However, it remains to be seen when Canada will affix its stamp of approval on the deal.

Deputy Prime Minister Chrystia Freeland, in a letter to leaders of the Bloc Québécois, the Conservative Party of Canada, the Green Party of Canada, and the New Democratic Party, asked for “views and support” as the House of Commons begins the process of debating the “new NAFTA.”

“This is a pivotal moment for our country, for North America, and for the furtherance of orderly, free, and fair trade around the world,” Freeland wrote.

“No one, least of all the Prime Minister or me, expects anything other than a full, frank, and vigorous debate about the new NAFTA. That’s exactly as it should be.

“That said, there is a reason why more than 75 per cent of Canadians support ratification of this agreement.”

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Freeland also cited recent developments benefiting the Canadian steel and aluminum sectors, including the U.S.’s removal of its Section 232 steel and aluminum tariffs on imports from Canada and Mexico:

  • This country won its largest trade dispute in modern times, when the U.S. dropped unjustified tariffs on our aluminum and steel in May of 2019, with no imposition of an export quota. The new NAFTA locks in this victory for thousands of Canadian workers and their families.

  • The threat of 232 tariffs on autos and auto parts was lifted November 30, 2018, the day the agreement was signed. This critical industry now has stability and room to grow and thrive.

  • The new NAFTA enshrines a competitive advantage for our steel and aluminum workers. Robust, new rules of origin for autos ensure privileged access for Canadian steel and aluminum.

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