Mexico's Foreign Minister Luis Videgaray (C), Mexico's Economy Minister Ildefonso Guajardo (3rd R), White House chief economic adviser Larry Kudlow (3rd R-standing) and Jesus Seade (R), Mexico's President-elect Obrador's representative in trade negotiations look on as U.S. President Donald Trump announces a deal to replace the North American Free Trade Agreement (NAFTA) at the White House in Washington on Monday. Photo: REUTERS/Kevin Lamarque
world

U.S., Mexico reach NAFTA deal, turning up pressure on Canada

45 Comments
By Roberta Rampton and Jeff Mason

The United States and Mexico agreed on Monday to overhaul the North American Free Trade Agreement (NAFTA), putting pressure on Canada to agree to new terms on auto trade and dispute settlement rules to remain part of the three-nation pact.

Auto stocks soared and financial markets firmed on the expectation that Canada would sign on to the deal by the end of the week and ease the economic uncertainty caused by U.S. President Donald Trump's repeated threats that he would ditch the 1994 accord.

But details of gains and concessions in the deal were only starting to emerge on Monday, and Trump threatened he still could put tariffs on Canadian-made cars if Canada did not join its neighbors.

"I think with Canada, frankly, the easiest we can do is to tariff their cars coming in. It's a tremendous amount of money and it's a very simple negotiation. It could end in one day and we take in a lot of money the following day," Trump said.

Negotiations between the three trade partners have dragged on for more than a year, putting pressure on the Mexican peso and the Canadian dollar both gained against the dollar after Monday's announcement.

The political stakes are high for all three countries. Trump and Republicans in the U.S. Congress up for reelection in November want to ensure farmers and other voters whose jobs depend on trade with Canada and Mexico that the deal is sealed.

Mexican President Enrique Pena Nieto wants to sign the agreement before leaving office at the end of November, and Canadian Prime Minister Justin Trudeau faces a national election expected by October 2019.

Canada plans to continue to negotiate, but would only sign a new agreement that is good for the country, a spokesman for Canadian Foreign Minister Chrystia Freeland said.

Freeland is expected to travel to Washington for talks on Tuesday, spokesman Adam Austen said.

Mexican Foreign Minister Luis Videgaray told a news conference in Washington that if Canada and the United States do not reach an agreement on NAFTA, "we already know that there will still be a deal between Mexico and the United States."

Officials said they hope Canada will agree to the terms by Friday, when the White House plans to formally notify Congress that Trump will sign the deal in 90 days. Congress has to approve it.

"There are still issues with Canada but I think they could be resolved very quickly," a senior trade official told Reuters in an interview.

If talks with Canada are not wrapped up by the end of this week, Trump plans to notify Congress that he has reached a deal with Mexico, but would be open to negotiations with Canada, U.S. Trade Representative Robert Lighthizer told reporters.

Some Republicans in the U.S. Congress called the deal a positive step but said Canada must be part of the new pact to avoid hurting U.S. jobs.

NEW AUTO RULES

The United States, Mexico and Canada do more than 1 trillion dollars in trade between them every year.

Trudeau spoke to Pena Nieto on Sunday and shared their commitment to reaching a successful conclusion of NAFTA "for all three parties" the prime minister's office said.

The Mexico-U.S. discussions focused on crafting new rules for the automotive industry, which Trump has put at the heart of his drive to rework the pact he has repeatedly described as a"disaster" for American workers.

Matt Blunt, president of the American Automotive Policy Council, which represents General Motors Co, Ford Motor Co and Fiat Chrysler Automobiles NV, said the group was optimistic about the new deal, though it was still reviewing the details.

The 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 U.S. trade official said. A fact sheet describing the bilateral agreement specified the content would be made in the United States and Mexico.

The Trump administration said the deal improves labor provisions, in part by requiring 40 percent to 45 percent of auto content to be made by workers earning at least $16 per hour a salary that could remove incentives for automakers to move jobs to Mexico.

The United States relented on its demand for an automatic expiration for the deal, known as a "sunset clause."

Instead, the United States and Mexico agreed to a 16-year lifespan for the deal, with a review every six years that can extend the pact for 16 years, U.S. Trade Representative Lighthizer said.

Mexico agreed to eliminate dispute settlement panels for certain anti-dumping cases, a move that could complicate talks with Canada, which had insisted on the panels.

Monday's announcement lifted equity markets in all three countries, with shares in automotive companies standing out on relief that the deal appeared to end the uncertainty that has dogged the sector for months.

General Motors Co, Ford Motor Co, and Fiat Chrysler Automobiles NV gained between 3.3 percent and 4.8 percent, while Canadian auto parts makers such as Magna International Inc gained 4.6 percent.

© (c) Copyright Thomson Reuters 2018.

©2018 GPlusMedia Inc.

45 Comments
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Trump's plan for everything:

1. Create a problem where there was none.

2. Fix the problem by undoing what was done.

3. Take credit for fixing the problem.

Wild applause from the IQ45 deplorables.

6 ( +13 / -7 )

Haha wow, Canada is really getting thrashed these days.. It looks like they're going to have to swallow a pretty bad deal with a smile

6 ( +10 / -4 )

This agreement highlights how completely useless the Canadian PM Trudeau is. Shear idiocy and complete disregard for Canadians by barging into trade meetings demanding a bunch of social justice warrior concessions and then stamping out of the room. Canadians are going to be paying for this governments long list of compounding failures for years and years to come. They did nothing about Italy's COOL of Canadian wheat, nothing, and since then every country knows they can push Canada around and get away with it. Trudeau is week and Trump and everyone else knows it. The ONLY thing Trudeau has been trying to do in negotiating with Trump is to try to signal his virtue by being the anti-Trump.

3 ( +8 / -5 )

Progress is welcome. After Canada, concluding zero tariff trade arrangements with Europe is next biggest priority. Japan and India also.

2 ( +7 / -5 )

Wow, even Canada's government controlled mouthpiece, the CBC, now says that the Trudeau notion that "no deal is better than a bad deal" is to misread the situation and that a bad deal is better than no deal at all. No matter how you look at it, the Americans out negotiated Canada and got a pretty good deal from Mexico.

2 ( +2 / -0 )

Lol, what if Australia declares trade war on the US in order to balance that trade deficit; after all, the US is taking advantage of them

Perhaps, but Australia posts overall small trade surpluses every month and America posts $40 - $50 billion deficits every single month and has been doing so for a longggg time. Last measure for June 2018 was a $46 billion deficit.

https://tradingeconomics.com/australia/balance-of-trade

https://tradingeconomics.com/united-states/balance-of-trade

2 ( +2 / -0 )

The Trump administration is not only fighting for American workers, this deal will increase Mexican workers' salaries as well. This is a win for the working class of both countries. Trudeau had better get with the program.

2 ( +2 / -0 )

Thank God for this President. Hisccwill definitely help him this midterm. oh I doubt it , Im predicting Mueller and Co will have another big bag of poo to dump before the midterms roll around.

1 ( +4 / -3 )

So how’s that wall coming along?

1 ( +4 / -3 )

To be clear, the US is the only country in the world with which Canada has a balance of payments surplus,

They have a small surplus with Australia as well. Possibly other countries if you compare the figures in Destinations and Origins towards the right hand side of this graph, based on 2016 figures.

https://atlas.media.mit.edu/en/profile/country/usa/#Trade_Balance

Still its nothing like China's $330 billion surplus......Although....

Its a bit more complicated than exports and imports crossing borders.

https://www.smh.com.au/business/the-economy/the-1-8-trillion-us-trade-surplus-that-trump-s-not-talking-about-20180613-p4zl8w.html

I am sure Canada will manage to come to the party soon. NAFTA is far too important for Canada to ignore.

1 ( +2 / -1 )

Trudeau is too busy selling out his country to the Chinese to care about NAFTA.

1 ( +4 / -3 )

Looks like Trump dropped the sunset clause. That was a massive hurdle.

0 ( +5 / -5 )

Fixing NAFTA will help US workers, especially African-Americans.

40 percent to 45 percent of auto content to be made by workers earning at least $16 per hour, so the other 55~60% will be made in Mexico where manufacturing average hourly wage is about $2.40 per hr. yep thats going to bring all those auto job back to the US

0 ( +4 / -4 )

The deal is not done until final with both countries legislative approving it. It is a long day from final.

0 ( +2 / -2 )

The US already exports more manufactured goods to Canada than it imports. It would help if Trump knew what he was talking about.

To be clear, the US is the only country in the world with which Canada has a balance of payments surplus, but that is not due to manufactured goods, but to their exports of oil and electricity to the US. With Trump weakening the fuel efficiency requirements, the imports of Canadian oil will continue. Again, it would be very useful if Trump knew what he was talking about.

-1 ( +2 / -3 )

The 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 U.S. trade official said. A fact sheet describing the bilateral agreement specified the content would be made in the United States and Mexico.

The Trump administration said the deal improves labor provisions, in part by requiring 40 percent to 45 percent of auto content to be made by workers earning at least $16 per hour a salary that could remove incentives for automakers to move jobs to Mexico.

Except for this, hardly any details yet. Don't even know if it's enough in order to end up accomplishing what he wants - that is, bring car manufacturing back to the US from Mexico. It may end up just status quo (as in, remember that North Korea summit............ still status quo)

And this is his best chance for Mexico to pay for any walls - this is his best leverage. If he doesn't get Mexico to pay for any walls in this deal, it's becoming even less and less likely than it already is

They have a small surplus with Australia as well. Possibly other countries if you compare the figures in Destinations and Origins towards the right hand side of this graph, based on 2016 figures.

Lol, what if Australia declares trade war on the US in order to balance that trade deficit; after all, the US is taking advantage of them

-1 ( +1 / -2 )

The United States relented on its demand for an automatic expiration for the deal, known as a "sunset clause."

Still, this is good sign - despite the rhetoric, the US can still compromise to make a deal

-1 ( +1 / -2 )

Oh my!

Stocks jump to record highs as US reaches trade deal with Mexico

https://www.youtube.com/watch?v=i1fDWBYy2nI

-1 ( +2 / -3 )

Thank God for this President. 

I’m quietly confident that God didn’t, and wouldn’t, vote for anyone like Trump.

-2 ( +7 / -9 )

I’m quietly confident that God didn’t, and wouldn’t, vote for anyone like Trump

Maybe he did and I’m voting the second time around.

oh I doubt it , Im predicting Mueller and Co will have another big bag of poo to dump before the midterms roll around.

That won’t happen and the Senate especially now more than ever won’t convict him. Look at Florida, looks like another Republican is going to win. Mueller’s dream is fading fast.

Mexican Foreign Minister Luis Videgaray told a news conference in Washington that if Canada and the United States do not reach an agreement on NAFTA, "we already know that there will still be a deal between Mexico and the United States."

Exactly, and the new government saying that this is a good deal for Mexico and America will overall work with both sides to make this happen. Mexico and the foreign minister seem very happy about the deal. Flawless victory!

-2 ( +3 / -5 )

Trump continues to keep his promises to support American workers.

Ingraham: Trump's trade triumph

https://www.youtube.com/watch?v=sTqruiMFDyQ

-2 ( +2 / -4 )

...and I’m voting the second time around.

Before anyone considers voting for Trump a second time, reflect on this - A wise man once said “Fool me once, shame on you; fool me twice, shame on me”.

Maybe too ‘deep’ for most of the Trump acolytes, but worth putting out there.

-2 ( +2 / -4 )

Another empty “victory” by the farcical Donald J. Trump, the purveyor of fake news,

disinformation and misinformation.

-3 ( +5 / -8 )

ROFL Yup, liberals are dumb and the proof of that are highly edited videos on Waters world, a real journalist. ;)

I can tell you from daily experience you always edit videos EVERY SINGLE news outlets do it, people do and say off the wall, unnecessary things, curse, people trying to fight you. You have segments and most are 3-5 minutes when you ask a basic question, you take the best footage of the answer to that question, anything else is irrelevant. But given the fact FNC has the least amount of news retractions is telling.

-3 ( +7 / -10 )

Crazy: Trump's plan for everything:

"1. Create a problem where there was none."

Uh, no, there was a problem.

"2. Fix the problem by undoing what was done."

Yeah, that and renegotiating trade terms.

"3. Take credit for fixing the problem."

True!

"Wild applause from the IQ45 deplorables."

Sure, just diss all Trump supporters by calling them IQ45 deplorables. You libs must be really pissed that Trump has reached a deal with Mexico.

-3 ( +2 / -5 )

Further reading on this topic reveals that this might all just be political theatre on the outgoing Nieto government as the new government of Mexico will have a different negotiator in the fall. This may be about autos but that's not the entire agreement until Canada Mexico and USA tri-laterally sign off on it.

Ideally not until next year when the new US Congress has a lot more socialists. That would be preferred

-4 ( +3 / -7 )

Not realistic I know, some NAFTA or NAFTA-like agreement will come to pass eventually. Even state/provincial would be better. I was hoping that the CPTPP would come into its own sooner and help diversify us off the loonie tunes

-4 ( +1 / -5 )

so that would make Japan the only friend of USA. Oh wait, forgot about Toyota import tax. But abe lives in Tokyo and Yamaguchi, why would he care about Nagoya or Japanese economy?

-4 ( +0 / -4 )

"USA doesn't physically have the resources that Canada sells to it."

Would you say that again!

-4 ( +3 / -7 )

Mexico agreed to eliminate dispute settlement panels for certain anti-dumping cases, a move that could complicate talks with Canada, which had insisted on the panels.

Big deal breaker. USA CONSTANTLY files some litigious dispute with Canada to pander to votes during their local elections, only to lose in the panel because it doesn't have facts. How many times? A dozen?  

If we lose the dispute resolution panels, it just opens up Canada to every loon lawsuit that comes out of your country that every Canadian has witnessed probably their entire lives. That's a no.

If NAFTA and FTA is cancelled the prices for numerous items will skyrocket as USA doesn't physically have the resources that Canada sells to it. Lumber for homes and aluminum (trying to get myself to say aluminium these days) for soft drinks to name two. When steel is produced, it crosses the border multiple times. If all that stops what happens to steel production?

Also Nieto just lost an election and he's signing this now? Does the new president agree or I thought the whole point was to get rid of the back room deals? Mexico might not be happy

-5 ( +5 / -10 )

Also it's not just the USA that's having an election in Nov, Canada has its national election in October of 2019. It can't give the opposition fodder that it sold out Canadians over an entire year before the vote. It's already bungled the environmental file and the election file. It would seal the notion away that the Liberal party isn't anything but a Conservative-light party. Therefore electing the Conservatives as punishment doesn't make any sense as they would gladly sellout Canadians even more (they're like a mini-GOP). So this leaves the NDP with an untested leader or the Green party that hasn't had more than 5% of the vote. It's a mess, so the Liberals can't be seen as acquiescing to a predictable belligerent position from an ignorant USA leadership or it can kiss its re-election goodbye

-5 ( +1 / -6 )

BlacklabelToday  08:13 am JST

The foreign minister said it does exist:

It's a meaningless statement from an outgoing government. The new government will also make a deal. There won't be two different deals

-5 ( +2 / -7 )

It's political theatre as noted by CBC news: https://www.cbc.ca/news/politics/nafta-wednesday-roos-1.4117414

"""Mexico's economy minister, Ildefonso Guajardo was back at the USTR office again Wednesday, as five weeks of talks between the two countries continued.

He suggested there are some competing agendas between Mexican officials like him, representing the outgoing president, and the negotiator who will be taking over the NAFTA file later this year, Jesus Seade.

Mexican negotiators were under pressure to try to reach an agreement by the end of this week in order for something to be signed before the government changes hands."""

-5 ( +2 / -7 )

This agreement highlights how completely useless the Canadian PM Trudeau is. Shear idiocy and complete disregard for Canadians by barging into trade meetings demanding a bunch of social justice warrior concessions and then stamping out of the room.

What a diatribe. This is not how anything happened nor how we conduct trade. You may be confused with PM Harper who did those exact things (minus the social wage requirements that USA just agreed to with Mexico)

-5 ( +3 / -8 )

Also all the thumbs down on what is basically history and not my opinion on that history is another reason I'll be happy with a cancelled trade agreement with the USA

-5 ( +1 / -6 )

President Trump continues to honor his campaign promises. Fixing NAFTA will help US workers, especially African-Americans.

Thank God for this President. Hisccwill definitely help him this midterm.

-6 ( +8 / -14 )

And the liberal media still crying.

The "US-Mexico Trade Agreement" does not exist -- and likely never will.

-6 ( +6 / -12 )

The foreign minister said it does exist:

Mexican Foreign Minister Luis Videgaray told a news conference in Washington that if Canada and the United States do not reach an agreement on NAFTA, "we already know that there will still be a deal between Mexico and the United States."

-6 ( +6 / -12 )

If NAFTA is cancelled, FTA is back in effect.

However USA has been making wingnut demand after wingnut demand leaving Canada to play the polite delay game without angering the stupids in DC. Given that border states are Canada's largest recipients of our trade, even on a collapse, there would still be border trade. If the national agreements fail, state/provincial agreements can follow easily enough

-7 ( +3 / -10 )

President Trump continues to honor his campaign promises. Fixing NAFTA will help US workers, especially African-Americans.

-7 ( +10 / -17 )

Also tariffs aren't much of a threat when they enrich Canadian companies. We're the producers and sellers dummies. If nothing it helps Canadians learn about Canadian companies that produce local items that maybe didn't get press before.

Ketchup was in the news over the last couple of years. French's makes ketchup with Leamington Ontario tomatoes but Kraft uses USA tomatoes. Kraft had abandoned Ontario but French's moved in and has had spikes in sales because of it. Sales of French's have gone up so much that protests on stores that don't carry the items have forced retailers to sell it.

While there are negatives, there are also positives

-7 ( +2 / -9 )

Canadian government is waiting for the Trump government to hoist itself on its own petard and is willing to wait it out until the USA drop the ball. Any day now. It's the only way out of this mess

-7 ( +2 / -9 )

In the photo, the US Army flag/banner looks like it has had the top half ripped off.

The only thing missing from the photo is Trump's audience hurriedly writing in notebooks - beyond that there is the resemblance to common media images of his little mate who he met in Singapore.

Agree with @crazyjoe:

Trump's plan for everything:

1. Create a problem where there was none.

2. Fix the problem by undoing what was done.

3. Take credit for fixing the problem.

Wild applause from the IQ45 deplorables.

But why does Trump always want to put people's noses strategically out of joint in the process?

Suppose the Canadians are just used to it (Justin's Dad once said about Nixon, 'Been called worse things by better people'); and the the Mexicans he's just another gringo.

-7 ( +2 / -9 )

The misguided and inept Rightists comments here, only prove the need for the dispute panels and are exactly what Canada fights against with facts every time, and win

Volume does not equal correct

-8 ( +2 / -10 )

Canada already agreed to NAFTA in err... 1993 was it?

A contract is a contract and a deal is a deal.

Or at least honorable countries think so.

-10 ( +8 / -18 )

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