U.S., Canadian relations improved after USMCA, deputy ambassador says

Published October 19, 2018 by Jessica Sabbath

U.S. and Canadian trade relations are in a better place now that an agreement has been reached to revise the North American Free Trade Agreement, Kirsten Hillman, Canada’s deputy ambassador to the U.S. said Thursday in Richmond.

“It has been a challenging time between our two countries this past year. We’re in a better place today,” Hillman told 350 people at the 70th annual Virginia Conference on World Trade at the Richmond Marriott.

Late last month the U.S., Canada and Mexico announced they had reached an agreement on an updated to NAFTA, called the United States-Mexico-Canada Agreement, or USMCA.

The USMCA includes new regulations on intellectual property, improves trade of digital content and provides stronger protections for environmental and labor standards. It also increases the percentage of North American vehicle parts that must be included in cars produced in the region from 62.5 percent to 75 percent. Another provision requires that 30 percent of vehicles made in the region be made by workers earning at least $16 per hour.

The USMCA still requires ratification by all three countries.

The agreement has many benefits, Hillman told conference attendees.  The USMCA reinforces the North American supply chain, removes red tape for trade among the countries and has new provisions to benefit more employees.

“We wanted to make it more relevant to a broader audience,” Hillman said. “There are some people who believe the promise of international trade hasn’t benefited them.”

The new agreement provides protections against discrimination and includes an entire chapter on small and medium-sized businesses, which are vitally important to all three countries’ economies, said Hillman.

“Whether the company has five people or 500,000 people, the more that we can get our companies to trade generally the more competitive they become,” Hillman said in an interview with Virginia Business after the speech. “The higher wages they pay … the more stable they are in terms of their place in the marketplace.”

Negotiations on the USMCA were intense and fast. Hillman said that trade agreements typically take three to five years.

“We achieved a complete renegotiation of the agreement in less than 14 months, which is at breakneck speed,” Hillman said.

Canada is Virginia’s No. 1 export market. In fact, Virginia sells more to Canada than it does to China and Mexico combined. Nearly 700,000 visitors each year come to Virginia, Hillman said.

Despite a deal on a new agreement, Hillman said Canada still wants to revisit the steel and aluminum tariffs imposed by the Trump administration. Canada was included in the U.S. administration’s 25 percent tariff on steel imports and 10 percent tariff on aluminum imports.

“We still have some work to do with respect to tariffs that remain in place,” said Hillman.

Canada responded with its own tariffs on U.S. steel and aluminum.  “When these tariffs are put in place our government had to put in place counter measures,” Hillman said.
 
The two-day Virginia Conference on World Trade included several panels in addition to Hillman’s speech.

The consensus among panelists was that the U.S. needed to compete in a free and fair marketplace. Most indicated that measures need to be taken to address unfair trade practices by China, but that an all-out trade war would harm the economy.

One panel included three former governors. George Allen, Bob McDonnell and Terry McAuliffe discussed international trade during their administrations, including its importance on the commonwealth’s economy and how trade missions were vital to land key deals for the commonwealth.

Another panel that included representatives of the logistics and shipping industries said that trade volumes had seen an artificial bump from importers trying to bring in goods before proposed tariffs hit.

But they concluded the economy could be heading for trouble next year if the 25 percent tariffs on $200 billion in Chinese goods go into effect.