U.S. announces trade deal with Mexico, Canada looking to revive NAFTA talks

by | Aug 27, 2018 | 0 comments

U.S. President Donald Trump has announced that a bilateral trade deal has been reached between the U.S. and Mexico, says it’s the end of NAFTA.

“They used to call it NAFTA,” Trump said. “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,” said the U.S. President.

U.S. and Mexican negotiators had been working for weeks to hammer out a deal between the two countries while Canada’s negotiators were forced to the sidelines.

The U.S.-based Motor Equipment Manufacturers Association (MEMA) which has been an advocate for a positive renegotiation of the North American Free Trade Agreement (NAFTA) applauded the progress with Mexico but is still pressing for a three-party deal.

“While we appreciate the progress made by the Trump Administration and the Mexican government, we encourage a renewed focus on a three-party agreement that includes Canada. Furthermore, at the close of the negotiations between Mexico and the United States, the parties agreed to a potential cap of Mexican motor vehicle parts exports into the U.S. MEMA is concerned that this may serve to decrease American manufacturing jobs and exports and put U.S. businesses at a global disadvantage — all while increasing costs to consumers. We are anxious to review the specific requirements with our members.”

A key point of the negotiations was on auto parts bound for auto manufacturing.

The new deal would require that 75% of the parts in any car sold in North America be produced in the United States or Mexico. Currently, about 62% of parts are required to be produced in the United States, Mexico or Canada.

The new deal would require that 40% to 45% of auto parts in cars sold be made by workers earning at least $16 USD per hour.

The agreement will last for 16 years, and will be reviewed every six years.

The agreement still has to be passed by the U.S. Congress and Mexico’s legislature.

In the wake of the agreement’s announcement, Canada’s Foreign Affairs Minister Chrystia Freeland will travel to Washington, D.C. Tuesday to rejoin the trade talks.

“As we have said all along, progress between Mexico and the United States is a necessary requirement for any renewed NAFTA agreement,” said a statement from the ministry. “Given the encouraging announcement today of further bilateral progress between the U.S. and Mexico, Minister Freeland will travel to Washington, D.C., tomorrow to continue negotiations.”

If Canada signs on to agreement–possibly as early as Friday–Trump has said he will inform Congress he is prepared to sign that deal. If not, he will inform Congress he has agreed to a deal with Mexico.


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