In November 2018, Canada, US, and Mexico signed the United States—Mexico—Canada agreement (USMCA). Once ratified by all the three countries, the USMCA will replace the North America Free Trade Agreement (NAFTA) which came into effect in January 1994. The renegotiation between the US and Canada was contentious. Negotiators need to understand the key elements of the trade relationship between the two countries, along with the within country stakes of different provinces and states. Suppose that, in September 2018, you were asked to write a document to inform Canadian negotiators in order to maximize Canadian welfare from reaching a trade deal with the US.
• Why is the trade relationship important to Canada? • Why is the trade relationship important to the US? • What are the key industries and contentious issues? • What is the impact of the contentious issues on different provinces in Canada? • What is the impact of the contentious issues on different states in the US? • Your recommendation to the contentious issues in this trade negotiation. • Your recommendation to the Canadian government regarding general trade policies.
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