President Trump is obviously pleased, since he once called NAFTA “one of the worst deals our country has ever made, from an economic standpoint.” Mexico’s now-former President Enrique Peña Nieto, and the new left-leaning President Andrés Manuel López Obrador, both supported Trump’s trade deal.
Prime Minister Justin Trudeau put his name on the dotted line. His politics are quite left-leaning, but he realizes free trade deals such as the U.S.-Mexico-Canada Agreement benefit his domestic economy and ensure that Canada will maintain greater access to international markets and enhanced consumer choice.
Trudeau was able to preserve Chapter 19 of the old NAFTA in the new agreement. This refers to the dispute-resolution mechanism that could deal with any perceived unfair anti-dumping and countervailing duties. Since the Canadian leader was concerned the U.S. president “doesn’t always follow the rules,” he wanted to keep it in place, and they did.
Trudeau also wisely cracked open the door to Canada’s dairy industry, which has long been a sore spot with Trump and other right-leaning figures. Indeed, it is a restrictive market governed by the notoriously anti-free-market principle of supply management, in which the Canadian state controls the supply and demand of milk, cheese, eggs and other products.
While some Canadian dairy farmers were frustrated with this news, the Liberals only opened up 3.6 percent of the entire industry. In other words, 96.4 percent remains in Canadian hands, and the U.S. farming community has a brand new market to explore, albeit on a very limited scale.
This wasn’t the perfect arrangement for the White House. But to put a new twist on an old phrase, something in the milk jug is better than nothing.
Trudeau will be running for reelection next year. Could his decision to sign the USMCA backfire? Since politics is a blood sport, anything is possible.
Some Canadians on both the left and right could be irritated that Trudeau gave in to Trump’s multitude of demands. The Canadian farming community could also potentially run a campaign against the Trudeau Liberals in the upcoming federal election.
Meanwhile, Conservative leader Andrew Scheer, who is opposed to eliminating supply management (a rarity for a political conservative) and has cultivated relationships with dairy farmers, claimed on Twitter, “Would I have signed this deal? I would have signed a better one.” Since he has never provided any particulars, I don’t know whether his deal would have been better, worse or the same.
Most Canadians ultimately won’t park their votes much differently because of the USMCA. They won’t like Trudeau any more, or hate him any less, because he signed a new trade deal to replace an existing one.
What could be interesting, however, is another role Trudeau could end up playing in this saga: political mediator.
When the Democrats regained control of the House during the midterm elections, a small group of young, left-wing radicals joined them. This includes Alexandria Ocasio-Cortez and Rashida Tlaib, both members of the Democratic Socialists of America. While this development obviously thrills left-wing publications such as The Nation, it’s a huge concern for the Democratic establishment. The party as a whole has clearly shifted further to the left in recent years, but most of its activists, donors and elected representatives don’t support socialism and support free trade.
A paper published last year by the Congressional Research Service written by M. Angeles Villarreal and Ian F. Fergusson noted that NAFTA “did not cause the huge job losses feared by the critics or the large economic gains predicted by supporters.” Until recently, in fact, NAFTA had led to lower tariffs, new business opportunities and job growth in all three countries.
That’s where Trudeau could join in the fray. He could serve as a possible conduit to the Democrats by outlying the positive political and economic impact that NAFTA had on the two countries, and why the USMCA would be a continuation of this success story. He could also reassure progressives that the USMCA is something they could use in election and reelection campaigns as a symbol of free-trade prosperity for the middle class — and a more fair and equitable balance of trade for all participating nations.
The establishment figures would likely be content with Trudeau's position, and the young radicals would learn they have to play ball every so often if they want to get support for their pet projects and causes.
So, while the USMCA isn’t a fait accompli, it’s about as close as one as you’ll ever see. It may even turn out that the last holdout, Trudeau, is the one who helps take it across the finish line.