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Alexander Panetta @Alex_Panetta
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We’ve just moved a story for POLITICO Pro subscribers with details on the major contours of the new NAFTA Canada, the US, and Mexico are on the verge of announcing later tonight, or likelier tomorrow.
2/ We’re being discouraged from casting it as a done deal because things can always take a nasty turn, but a few of the details of the likely new NAFTA agreement are as follows:
3/ Consumers in Canada will get to import more online purchases - more than 5x more, although the countries have been haggling with the design of new de minimis rules (how much is tax exempt, in addition to duty exempt) which could affect a lot of things (Canadian retailers,
4/ ...the federal treasury, and the final dollar amount - which last I heard was in the ballpark of $100). -Canada seems likely to accept a cap on auto export growth to the US in exchange for a tariff exemption, but it’s a pretty hypothetical cap (last I heard was 40% above
5/ current levels, though they were still playing with the design. Like, is the % increase for total cars for vehicles, and for value of parts for parts, etc? -Dairy. Some tough compromises made. The % opening won’t be huge - probably just a little over the 3.25% liberalization
6/ in TPP. But the system design will include some additional liberalizing changes that make the impact bigger. One is Class 7 limits, another is a change to the formula of what counts for 3.25% in TPP. -And then there’s Chapter 19. Last I heard was it’s likely to be pared
7/ back somewhat, maybe with a sunset clause. I still don’t have that detail (COME ON, PEOPLE - YOU KNOW WHERE TO FIND ME!!!!) but its current form will have some limits.
8/ We’re being told everything could still take a bad turn, don’t count your chickens, etc etc. But if a NAFTA deal doesn’t happen by tomorrow it will come as a surprise to some people close to the talks.
9/ We’re at the point in the process where the PM is actively working phones. Not sure when/if a Trudeau/Trump call happens, but these can matter a lot. Brian Mulroney still loves telling the story about how warned Jim Baker about what he’d tell Ronald Reagan, in final minutes of
10/ of the original NAFTA talks. US said it wouldn’t do what we today call Chapter 19 because congress told Baker it was an insult to US sovereignty and possibly unconstitutional (many still feel that way). Mulroney replied that he’d call Reagan and ask why
11/ the US is capable of doing a nuclear arms agreement with its worst enemy, the Soviet Union, but can’t close a trade deal with its best friend? Baker didn’t want Mulroney talking to Reagan. Few minutes later, he came back with a dispute resolution guarantee. What stories will
12/ tonight bring? Speaking of which, I’m about to go stake out the Canadian prime minister’s office for the first time in 10 years. A little colder tonight in Ottawa than I’d like, but sure brings back memories.
13/ One thing that should be fairly obvious from this thread: the fine print matters, and it’s in flux. Like, does Canada get a $100 online shopping de minimis that includes duties AND taxes (which Ottawa hates), or a $150 de minimis than includes just duties, or a hybrid?
16/ Today’s a bit of a first for me. I’ve never covered the same story and written for two different national audiences. My story for POLITICO 🇨🇦 subscribers - Trudeau heads to office, convenes stakeholders as countries close in on NAFTA changes on dairy, de minimis, Chapter 19
17/ And my first story for the main POLITICO website: “President Donald Trump is on the cusp of locking down his biggest international trade agreement after months of brass-knuckled bargaining and public tongue-lashings gave way late Sunday to a frantic few hours of deal-making.”
18/ FYI - the scene of the NAFTA story in Canada. The Prime Minister’s Office, across from Parliament Hill
19/ So our NAFTA stakeouts began outside USTR in a rainy Washington spring, persisted in a distressingly sweaty DC summer, and apparently end here on a crisp and drizzly Ottawa fall night.
20/ What does trade stability with the US mean to Canada? The Canadian dollar had a very big weekend, picking up two cents on the mere rumors of a deal
21/ One thing to keep in mind while reading the inevitable stories about What Countries Won/Lost in an agreement: Countries include buyers and sellers of the same products. These stories tend to present ore protection, higher prices for consumers as a win. Take for example
22/ autos. Certainly, stories will say US and Canada *won* because it might mean more jobs in the sector, but the new rules might make cars more expensive. It’s the exact opposite on dairy/retail - everyone will Canada lost market share, but consumers may get lower prices.
23/ What I can tell you about the new 'Chapter 19' -- It's now called 'Chapter 10' of the new NAFTA. It still includes 5 panelists (two per country, plus a draw). There appears to be some language on cooperation for more transparency in international application of duties. But
24/ I will confess that if you're not a trade lawyer (raises hand), and it 12:11 in the morning, it's a complete nightmare to try understanding
25/ Hey, British Columbia: You'll be allowed to buy American wines on your grocery shelves as of Nov 1, 2019! I suppose some will view this as a Canadian "concession," and describe it as such. Some might call it a win for consumers. A chacun son gout
26/ Here's something that will be of great interest to subsection of Canadians: "The Agreement creates no rights to the natural water resources of a Party to the Agreement." (It's been a thing Canadian trade critics have always worried about - was even a movie about it I think)
Hallelujah, after months of trying, we finally have a dairy access number. Stay tuned for that and many other upcoming details from the folks at Politico
Buy American - doesn't appear to be in the deal. Government Procurement: "No party ... (shall) discriminate against a locally established supplier on the basis that the good or service offered by that supplier for a particular procurement is a good or service of any other Party"
Canadian whisky will be a legally recognized product; as will US bourbon and Tennessee whisky and Mexican tequila and mezcal 🥃
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