It’s official: Donald Trump is not going to break up the North American Free Trade Agreement. Instead, he’s going to rename it.
After a last-minute flurry of negotiations, the United States and Canada finally agreed on changes to NAFTA Sunday night, assuring that it will continue to cover both countries along with Mexico. The breakthrough comes after months of surreal tension between Washington and Ottawa, during which many wondered whether Donald Trump might actually try to boot our frigid neighbor from the pact. After reaching a deal on revisions with Mexico in August, Trump threatened outright to leave Canada out of the new NAFTA unless it agreed to more concessions.
Whether Trump was ever really in a position to follow through on his warning or was effectively bluffing is somewhat debatable, but this weekend’s breakthrough erases any question marks about whether he would try. Both sides rushed to hit a Sunday night deadline for releasing the new text to ensure that Mexican President Enrique Peña Nieto can sign the deal before leaving office on Dec. 1.
On Monday morning, Trump celebrated the accord and its clunky new title.
Experts are still making their way through the deal’s details. But among its major concessions, Canada has agreed to give United States farmers more access to its heavily regulated dairy market—thus assuaging Trump’s single most frequent complaint about Canada’s trade policies. Canada also signed on to stronger intellectual property protections sought by U.S. industries, and increased the dollar limit on the amount of merchandise Canadians can buy across the border before duties kick in (alas, we won’t be hearing about shoe smuggling any longer). However, the Trump administration gave Canada a win by dropping its demand to scrap a dispute-resolution system in which countries can challenge each others’ anti-dumping tariffs outside of each others’ courts.
Overall, the changes are more than cosmetic, but perhaps a bit less than Trump promised when he vowed to renegotiate what he’s often called “the worst trade deal in history.” The deal is designed to benefit U.S. auto-workers by requiring that more of each vehicle be produced within North America to qualify for tariff-free treatment, and that a certain percentage of each car be built by employees making $16 an hour. It curtails the use of controversial investor-state dispute settlement panels. The IP protections are a boost—perhaps unfortunately—to copyright-holders and prescription drug companies. But progressive groups are already complaining that the agreement still lacks mechanisms to enforce labor standards in Mexico, among other issues.
But more than the details, the most important thing about this deal is that it exists at all. One of the major questions about Trump’s approach to economic policy and globalization was whether he would simply light trade deals on fire, or use his sometimes unhinged rhetoric as a means to obtain some reforms. In the case of NAFTA, we have a solid answer. Whether you like it or not, it’s spelled USMCA.
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