USMCA Agreement signed in Mexico; Canadian aluminium industry disappointed with some terms

The US, Mexico and Canada have finalised a trade deal (USMCA) that will replace the 25-year-old North American Free Trade Agreement (Nafta). Representatives from the three countries signed the deal in Mexico yesterday.

The US-Mexico-Canada Agreement (USMCA) will be "the best and most important trade deal ever made by the USA. Good for everybody - Farmers, Manufacturers, Energy, Unions - tremendous support," Donald Trump tweeted after the deal was signed.

The bill was agreed in White House after some revisions on the labour and environmental rules. House Speaker Nancy Pelosi declared the revised pact "infinitely better" than the deal the three countries announced last year.

However, the Canadian aluminium industry is disappointed with the agreement as the deal excludes definition for aluminium rules of origin for autos. Such exclusion, according to the Canadian industry will allow Mexico to import metal from China and other parts of the world to make auto parts. This is likely to affect the North American automotive value chain.

“The advantage thus conferred to Mexico makes it more or less China’s North American backyard to dispose of the products of its overcapacity, thereby generating the gradual relocation of North American transformers to Mexico,” said Jean Simard, President and CEO of the Aluminium Association of Canada.

He said the breach will have consequences on the Canadian value chain and more directly on their US customers.

According to Mexican President Andres Manuel Lopez Obrador, the deal covered the final sticking points of labour rights, steel and aluminium and he is happy the negotiations did not drag till 2020.

Though the revised deal has put an end to some of the initial uncertainties in the pact, it leaves a breach in the robust and dynamic US automotive market and it creates further constraints for the in the already challenging market environment. He said that the aluminium industry will analyze the impact of the new rules over the next few weeks and will make sure to safeguard the competitiveness of the world class aluminium industry in Canada.