US, Mexico reach NAFTA deal as pressure turns to Canada

27 August, 2018, 23:01 | Author: Corey Lynch
  • President Donald Trump

The North American Free Trade Agreement, better known as NAFTA, has been around for 24 years, easing trade between the United States, Mexico, and Canada.

In fact, on Monday Trump demonstrated this fact on live television ahead of his call with Mexico president, Enrique Peña Nieto. "It's a big day for our country", said Mr. Trump, speaking in the Oval Office.

He also reframed the negotiations as two bilateral trade deals.

Trudeau has said Canada "will not, cannot" sign on to an auto-terminating deal, which business leaders say would generate the kind of uncertainty trade agreements are supposed to eliminate. Under U.S. trade law, Congress must be notified 90 days before voting on the deal, meaning notification must happen this week to meet the timeline.

There is one difference left to iron out, Mexican Economy Minister Ildefonso Guajardo told reporters early on Monday as he entered the Washington office of the U.S. Trade Representative's office where negotiations are going on.

But Trump hinted that all might not be smooth sailing from here, suggesting he could cut Ottawa out of the deal reached with Mexico and adding that he wanted to change the agreement's name.

Another key part of the new trade deal increases the percentage of a vehicle that must be made in North America to qualify for lower-tariff import into the USA.

The U.S. -Mexico deal would require 75 percent of auto content to be made in the NAFTA region, up from the current level of 62.5 percent, a second U.S. official said.




Trump tweeted on Monday morning: "A big deal looking good with Mexico!". He even added later in the day that he had "just signed a trade agreement with Mexico", which can not happen without the USA first nixing NAFTA.

The president said that he will be calling Canadian Prime Minister Justin Trudeau.

Adam Austen, a spokesman for the Canadian foreign minister, Chrystia Freeland, said: "Canada is encouraged by the continued optimism shown by our negotiating partners".

"While higher trade barriers would shield some domestic industries from import competition, the resulting wage gains would be more than offset by the detrimental effects of reduced exportopportunities and the increased costs of imported inputs for manufacturing firms", wrote BIS senior economist, and the report's lead author, Raphael Auer. Trump's chief agricultural negotiator, Gregg Doud, said talks with Canada have been "really, really hard".

Trump says that on Friday, the Mexican deal will go to the lawmakers.

He said it would be replaced in part by the newly named United States-Mexico Trade Agreement. He then congratulated him on the new deal with the cameras rolling.

Trump used his announcement on Monday to gripe about Canadian tariffs on American dairy products. But as with many of Trump's declarations of victory, it's far from clear that this deal will be realized.

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