NAFTA Replacement Agreement Reached By U.S. And Mexico, Canada Pressured To Meet Trump’s Demands
Donald Trump announced that he has reached an agreement with outgoing Mexican President Enrique Peña Nieto surrounding the North American Free Trade Agreement (NAFTA) CNN reports. Notably absent from the announcement was Canada, who was not part of these two-party discussions.
The Inquisitr reported earlier on Monday that the deal was near completion, with only a few issues to iron out that were clearly resolved between the two presidents, with the markets already reacting positively.
Trump has long derided NAFTA, and with that in mind has proposed changing the name of the deal to one that might leave Canada frustrated as he said to CNN.
“They used to call it NAFTA, we’re going to call it the United States-Mexico trade agreement. We’re going to get rid of NAFTA because it has a bad connotation.”
Making a new bilateral deal with Mexico is something that the president has floated in the past, with an openness to multiple bilateral deals forming part of his strategy around the reworking of NAFTA. But by coming to an agreement on a new deal with Mexico, Trump appears to be pressuring Canada to come to the table.
That call has already been answered with Reuters reporting that the Canadian Foreign Minister, Chrystia Freeland, will travel to Washington D.C. tomorrow to continue negotiations from the Canadian side.
United States-Mexico Trade Agreement: https://t.co/E1AzveYPli pic.twitter.com/ZYbHt1pD8a
— Donald J. Trump (@realDonaldTrump) August 27, 2018
The biggest change in the agreement surrounds automobile manufacturing, reports the New York Times. Under the old agreement car makers were required to manufacture 62.5 percent of the vehicle’s value in North America to qualify for zero tariffs, under the revised deal that rate will increase to 75 percent.
Also included in the deal are clauses about how automobiles are made, with requirements to use North American parts. More than 40 percent of a vehicle must be made by workers paid at least $16 an hour.
Among the most controversial parts of a NAFTA deal was a “sunset clause” with Trump wanting the deal to automatically expire if the countries didn’t vote to extend the deal every five years. In the U.S.-Mexico deal, there was some negotiation on that clause with an agreement of a review every six years, pushing the deal out to a guaranteed 16 years.
While Trump has managed to get a deal with Mexico, Canada’s agreement may be important for the administration to get the deal through Congress, which had only given the president the authority to negotiate a three-country deal which included Canada.
For his part, President Nieto wants Canada in on the deal, restoring the ties the three countries had before the renegotiations began.
“It is our wish, Mr. President, that now Canada will also be able to be incorporated in all this,” Mr. Peña Nieto said through a translator, according to the New York Times. “I assume that they are going to carry out negotiations of the sensitive bilateral issues between Canada and the United States.”
There is still work to be done for the Trump administration on NAFTA, but today’s deal with the Mexican government was a big step, the next step will be trying to bring Canada on board.
