Trade Agreement Highlights
To supplement the agreement details George covers in the video, below is a compilation of select noteworthy changes that will impact various industries, and as a result, the Canadian economy.
Tariffs
- Tariffs on steel and aluminum will remain in place, as will retaliatory measures taken by each country
- No new tariffs can be applied under the same law for at least 60 days to provide a window for negotiation
Duty Thresholds
- Higher thresholds will be put in place for when Canada can apply duties to cross border purchases from the US (Canada’s minimum level to increase to $150 from $117)
Auto Industry
- Canada and Mexico will not be impacted by any tariffs unless exports top 2.6 million units annually respectively (2.6 million represents current exports plus a growth buffer of 40%)
- 75% of the parts used to produce a vehicle must originate from the countries in the agreement (increased from 62.5%)
- 40% of a vehicle is to come from workers whose pay averages more than US$16 per hour
Dairy Industry
- The US will receive expanded access to Canada’s protected dairy market
- Market access for the US will exceed Canada’s concessions in the Trans Pacific Partnership (TPP), which will increase from 3.3% to 3.6%
Dispute Panels
- The Chapter 19 dispute resolution mechanism remains untouched
- The panel will continue to hear bi-national anti-dumping and countervailing duties cases
Sunset Clause
- The USMCA agreement will run for a 16-year term, with a chance of extension after 6 years
- The participating countries will have the option to review and fix any problems
This video is part of our monthly George Davis Report series, with ad hoc reports brought to you as current.
© RBC Capital Markets, LLC, RBC Dominion Securities Inc., RBC Europe Limited 2018