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Canada’s Corroborating Trade Deal: USMCA on Sidelines of Settlement?

Signed as a replacement for NAFTA, the USMCA deal is now moving ahead to find its natural conclusion. With Canada taking a first step towards corroborating a new North American trade agreement on Monday, significant progress has been marked in the right direction.

The development has been registered just three days ahead of US Vice President Mike Pence’s trip to Ottawa, aimed towards discussing the passage of treaty.

The deal, which would replace 25-year-old trade accord, is still to be approved by legislatures of the three participating nations – Canada, Mexico and the United States.

The United States reached the decision to lift tariffs on steel and aluminuim on May 17, marking the biggest development in the case. The move also removed the biggest obstacle, which had the halted the progress for months.

US-Canada relationship has maintained strong roots ever since, with the US accounting for 75 percent of Canadian goods export. The sign has also come as a major positive for Justin Trudeau and his Liberal party, with national elections just five months away.

Earlier this month, post announcement about removal of tariffs, the Mexican government confirmed reaching on common grounds with the US. In a statement issued by office of President Andrés Manuel López Obrador, the government said that there would be no quotas. “Tariff-free trade will be restored in these products,” the statement read. Conversely, Mexico said that it would also lift the retaliatory tariffs that it had imposed on America.

However, even with an accord to resolve the tariffs well achieved, the North American pact still faces a lot of problems. Lawmakers have argued that the pact’s environmental protections are extremely weak, besides calling that its protection for drug companies may not be capable enough to make health care affordable.

As per the reports, mounting pressure on the US President to reach an agreement with Canada and Mexico had been playing on his mind. Following, which he had to sideline his affection for the tariffs.

According to a congressional source, the White House was facing the pressure from Republicans in rural states, whose farmers were suffering from the retaliatory tariffs. The problems multiplied further when the trade talks with China collapsed, leaving Trump with the last resort to completely eradicate the tax clause.

The decision implied that administration reversed as much as 25 percent tax on steel, while 10 percent on aluminum. Besides, announcing a six-month delay in ascertaining whether to levy tax on foreign automobiles or not.

The latest move is highly likely to ease of pressure from Trump’s administration, who can then solely focus on their spat with China. US-China have been going out at each other for more than a year now, and the latest move saw US announcing some stiff actions against Huawei, highlighting the forged technology transfer claim.

Yet, keeping aside the political spectrum of US-China, the next meetup between Pence and Trudeau on Thursday is a crucial step to determine the exact position three nations stand.

Also, some lawmakers have hinted that passing the treaty would become more difficult after the summer recess, as campaigning for the 2020 presidential election kicks off. Thereby, arising a severe possibility that USMCA would soon replace NAFTA, for whatever of the two reasons Trump believes in.

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