New trade agreement doesn’t remove problem tariffs

The new trade agreement with the United States and Mexico provides stability, but doesn’t solve the main issue facing the area’s agricultural equipment manufacturers.

The United States–Mexico–Canada Agreement was signed Oct. 1. It has yet to be ratified by any of the three countries’ legislatures.

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“We’re happy that – finally – an agreement’s been signed,” said Dean Carnago, Schulte Industries’ president.

The problem for Schulte isn’t getting its products across the border, which is where 65 to 70 per cent of it goes, it’s getting the steel products it needs to make them.

The Trump administration has placed a 25 per cent tariff on steel and 10 per cent on aluminum products. The USMCA doesn’t do anything to get rid of those tariffs – though a side deal does prevent the American government from slapping new tariffs on the Canadian automobile industry.

The steel tariffs have increased Schulte’s steel costs by 50 to 55 per cent.

“We’ve tried to mitigate and absorb as much as we could as a company, but we’ve had to increase prices,” Carnago said.

The USMCA will allow US dairy producers to sell a quantity of dairy products that’s equal to 3.6 per cent of the Canadian market before any Canadian tariffs come into force. The supply management system will remain.

Automobiles must have 75 per cent of their work done in Canada, US or Mexico, up from 62.5 per cent. By 2020, 30 per cent of the work must be done by workers earning $16 per hour. That increases to 40 per cent by 2023.  

Copyright will extend from the creator’s life plus 50 to the creator’s life plus 70 years. Drugs have to be on the market for 10 years instead of eight before generic versions can be produced.

The agreement lasts for 16 years and must be reviewed after six years

“A few days into this agreement, I’m hopeful the USMCA will be a good deal for our economy,” said Kelly Block, the MP for Carlton Trail—Eagle Creek. “I think, through, that after studying this agreement, I and my colleagues are really alarmed by the number of concessions that were made by Justin Trudeau.”

The MP is not happy with the dairy changes – her riding contains the most dairy producers in the province – nor is she happy that the steel tariffs haven’t been removed, something, she said, that hurts manufacturers around Humboldt.

“At the end of the day, I believe we should look at the United States,” she said. “They are measuring this deal by what they’ve gained and we’re measuring this deal by what we had to give up.”

Block said if her Conservative party was in government, it would have worked hard to ensure that Canada wasn’t giving up more than it got.

Todd Lewis, the president of the Agricultural Producers Association of Saskatchewan, said the USMCA is a positive move for the majority of the Saskatchewan agriculture industry, which is very export-oriented.

“I think it’s important that it’s been signed just for clarity on the trade file. There’s lots of trade between Saskatchewan and the United States, it’s our major export market so it’s good to have a deal signed up.”

He said there were concerns about the dairy changes, but that they weren’t a surprise, given the Americans public position on the matter.

Scott Moe, the province’s premier, agreed with Lewis.

“It’s been a part of the last three major trade agreements we’ve made and I don’t think it’s  surprising it’s part of this one,” he said at a press conference.

The premier is pleased with the agreement, but not happy the steel tariffs remain. For him though, the USMCA could mean opportunities for agriculture, especially the agri-value industry.

“For instance, the largest imported product from Montana to the province of Saskatchewan is wheat, of all things, where we add value to that product and then send it on,” he said. “We have the ability to continue to have that synergistic relationship.”

Moe reminded the media that 55 per cent of Saskatchewan’s exports go to the US, while 85 per cent of its imports come from there.

“Preserving that type of trading environment with that large of a partner is of crucial importance to the future of our province.”

© Copyright 2018 Humboldt Journal

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