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October 4, 2018 3:45 PM, EDT

Trucking Welcomes Trade Agreement With Canada

Donald Trump gestures President Donald Trump gestures as he announces the trade deal, in the Rose Garden of the White House on Oct. 1. (Pablo Martinez Monsivais/AP)

The trucking industry expressed support and relief that Canada has agreed to a new trade deal with the United States and Mexico which, if approved by Congress, will replace the North American Free Trade Agreement.

President Donald Trump presented what he called a “modernized” and “rebalanced” trade pact this week after days of intense negotiations between the Office of the U.S. Trade Representative and Canadian Foreign Affairs Minister Chrystia Freeland.

The United States struck a deal earlier with Mexico and set a deadline of midnight Sept. 30 for Canada to become a party to what is now called the U.S.-Mexico-Canada Agreement (USMCA).

“USMCA brings our trade relationship with Canada and Mexico into the 21st century,” Trump said in statement Oct. 1. “NAFTA failed repeatedly to keep up with the fast-changing American economy: The old rules helped incentivize offshoring, leading far too many manufacturing jobs to leave the country.”

Chris Spear

Spear

The new agreement requires 75% of auto content to be produced in North America, an increase from 62.5% under NAFTA, but does not address U.S.-imposed tariffs on steel and aluminum from Canada.

On the possibility of tariffs on automobiles, light trucks and auto parts produced in Canada, the United States promised to exclude annually a quota of 2.6 million passenger vehicles or light trucks, or up to $32.5 billion in declared value for auto parts.

The deal also includes a change in Canadian regulations that will allow greater access for U.S. dairy products, eggs and poultry.

For Canada and Mexico, the agreement updates rules regarding data sharing and protection of intellectual property, and both countries agreed to raise the minimum shipment value of small packages shipped across the border that are subject to duties or taxes, a change that is expected to spur more e-commerce.

Another provision gives the United States the right to limit access for longhaul truck drivers from Mexico.

U.S. and Canadian trucking officials expressed support for the new trade pact.

American Trucking Associations President Chris Spear called the new pact “a positive step” in preserving a 25-year-long tradition of free and open trade in North America.

“Trucks move nearly $385 billion in goods between the U.S. and Mexico and $336 billion in trade across the Canadian border,” said Bob Costello, ATA chief economist. "Continuing to have free trade between our three countries will only help our industry well into the future.”

Stephen Laskowski

Laskowski

Canadian Trucking Alliance President Stephen Laskowski said he also is pleased that the new trade agreement was reached.

“CTA believes the government of Canada delivered the best deal possible,” he said in a statement. “Now it’s up to the supply chain to take some time to understand what this deal means to our businesses.”

National Tank Truck Carriers President Dan Furth said he is hopeful that the agreement will lead to the elimination of tariffs on Canadian exports of steel and aluminum, which have raised costs for trailer manufacturers.

“I believe that getting this deal across the finish line creates optimism for important trade discussions further on down the road,” Furth said.

Brett Doney, president of the Great Falls Montana Development Authority, said he expects to see an increase in investment by Canadian companies in the United States after implementation of the deal.

“We see significant opportunity to work with Canadian firms in the energy and agriculture sectors,” Doney told Transport Topics.

Recent moves by Canadian firms include a steel fabrication plant, an aircraft painting operation and a livestock nutrition sales and service center.

Another Canadian company has agreed to buy land in Great Falls for an egg processing facility.

Jon Samson, executive director of the Agriculture & Food Transporters Conference, an affiliate of American Trucking Associations, said the agreement will have a positive impact on the dairy industry.

“The U.S. will be granted substantially more access to sell milk, cheese, etc., to Canadian customers, something that was restricted in the past,” Samson noted. “Overall, access to both Mexico and Canada continues to be positive for American farmers.”

A key feature of the new trade pact is that it maintains an existing mechanism for dispute resolution and does not include a U.S.-supported proposal to automatically terminate the agreement after five years.

The agreement includes a 16-year sunset provision, but the three countries will meet every six years to decide whether to renew the pact, which potentially keeps the agreement going in perpetuity, according to ATA's Costello.

“These are victories for the U.S. business community,” Costello stated.

USMCA also would establish a committee to monitor and make recommendations related to transportation services.

“The Mexican delegation proposed this committee and ATA supported,” Costello noted. “In the end, cross-border transportation is a big deal to trucking and a new USMCA will keep trade flowing assuming it passes Congress.”