NAFTA’s Renegotiation and The Cost of Milk

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The North American Free Trade Agreement’s infamous renegotiation can be seen as the offspring of Donald Trump’s ongoing series of political tantrums as President of the United States. Ending the lifetime of one of the most iconic trade agreements in North American history, the renegotiation efforts caused much dispute between the three major leaders involved in the process, almost pushing Canada to the brink of a tariff war. Even with its own colourful list of ups and downs, NAFTA was long disputed by the Trump Administration, despite the fact that it proved to be of great economic benefits to the entire continent. As NAFTA’s new rebranding effort is ready to hit the shelves of your nearest supermarket, what does the new United States, Mexico, and Canada (USMCA) Trade Agreement mean for us as Canadian consumers?

There are many who would like to call the USMCA an “America-first” trade deal, prioritizing the needs of American citizens due to a widespread lowering of trade tariffs in the country’s favour. It seems as though the outcomes of the renegotiation are products of Trump’s desperate need to prove himself as an adult in the world of international business and politics. While it is difficult to determine the impacts of the agreement on Canadians at such an early stage, it is clear to see where we might fall behind on such a massive renegotiation. Whether it’s the new types of milk found in our aisles, the amount we can spend shopping online, or the prices of American prescription drugs at the nearest Jean Coutu, here’s how NAFTA’s facelift will impact Canadian shelves.

The Canadian dairy industry was completely restructured under the USMCA. After negotiations, United States dairy farmers were given access to 3.5 percent more of the protected dairy market in Canada. As consumers, this means that there will be more access to American dairy products, like milk protein concentrate, skim milk powder, yogurt, and infant formula in Canadian supermarkets. There is a lot of dispute as to whether this change will help or hinder Canadian dairy farmers, but it is unlikely this will increase the price of your cereal in the morning. Scotiabank Deputy Chief Economist, Brett House, explained that Canadians will experience a little more variety, but by no means witness any revolution amongst the dairy aisles.

For those who indulge in the occasional online shopping spree, NAFTA’s renegotiation is good news. The USMCA increases the duty-free limit on US online goods from $20 to $150, a jump of almost 800 percent. This means that purchases of up to $150 made online will not be taxed by the Canadian government. The agreement also means that we can enjoy lower prices and faster delivery times due to fewer customs processing according to Bank of Montreal’s chief economist, Douglas Porter. Although this could have mixed effects on Canadian retailers and businesses, there is no question that the threshold raise is a welcomed one.

The USMCA increases the duty-free limit on US online from $20 to $150, a jump of almost 800 percent. This means that purchases of up to $150 made online will not be taxed by the Canadian government. 

A small section of the new agreement has also extended the patent protection for certain prescription drugs from eight to ten years. This means that United States-based companies will be permitted to sell their drugs on Canadian shelves for an extended period of time before facing any Canadian (or international) competition whatsoever. This is a clear indication that the price of prescription will rise on average in the coming months and years. While this part of the negotiation will do wonders to the American pharmaceutical industry, it is a definite product of the political bullying that Trump has administered on the negotiation process.

For consumers, these are the most tangible effects of the recent renegotiation. For now, let us ignore the rushed and somewhat ugly spray tan that has been applied to NAFTA’s years of settlement. We should be able to enjoy the benefits of the new deal, but we should be cognizant of the United States’ growing influence on trade deals and Canada’s lowered bargaining position. After all, you cannot have your milk and drink it too.

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