Rail industry welcomes U.S.-Canada free trade deal

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WASHINGTON — The railroad industry was pleased that the U.S. and Canada were able to strike a free trade deal on Sunday, ending nearly two years of uncertainty between two of the world’s largest trading partners.

Independent rail analyst Anthony B. Hatch of ABH Consulting says details in the deal’s fine print will matter. But, in principle, the U.S.-Mexico-Canada accord “eliminates the uncertainty that is the bane to investors — not just rail investors but manufacturers investing in plant expansions.”

The Association of American Railroads welcomed a deal that includes all of North America.

“The free flow of goods across North America without burdensome tariffs is a net positive for U.S. workers, bedrock industries and the economy,” AAR President Edward R. Hamberger said in a statement. “Our industry knows this firsthand due to the massive amounts of goods we move — such as automobiles, agricultural yields, and energy products — as part of a sophisticated supply chain that was shaped in large part by free trade.”

Canadian National spokesman Patrick Waldron says the railway was following developments closely and was pleased to see a trade deal reached.

A Canadian Pacific spokesman did not immediately return an email seeking comment.

Canadian railway executives have supported a modernization of NAFTA. But they’ve also said their railroads would not have been overly exposed to tariffs if NAFTA negotiations failed because U.S.-Canadian trade would revert to a previous agreement.

The trade deal ends uncertainty for the railroads’ customers, however. That’s particularly the case for auto assembly plants in Canada, the U.S., and Mexico, which depend on the free flow of parts and vehicles across North American borders.

“This is an encouraging development,” the Auto Alliance, which represents a dozen automakers, said in a statement today. “The North American auto industry needs to have all three countries included in the agreement to realize the benefits and goals of a new pact.”

About 7 percent of CN’s revenue, and 5 percent of CP’s, is tied to auto traffic, according to their annual reports.

Of CP’s finished vehicle traffic, 59 percent originates in Canada, 24 percent in the U.S., 7 percent imported from Asia or Europe, and 5 percent originates in Mexico, according to the CP Investor Fact Book.

President Donald Trump’s administration made renegotiating or scrapping the North American Free Trade Agreement a priority. It reached a deal with Mexico in August.

The new USMCA deal will be reviewed by lawmakers in each country for final approval.

UPDATE: Full write-through of story. Oct. 1, 2018, 3:06 p.m. Central time. 

NEWSWIRETrains News Wire

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