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Breakingviews - U.S.-Mexico deal is only start of tough NAFTA road

27 August, 2018, 23:03 | Author: Sara Gill
  • U.S. and Mexico make NAFTA breakthrough, increasing chances of final deal

President Trump announced an overhaul to the North American Free Trade Agreement (NAFTA), including a new name change to the deal.

President Trump made the announcement and brought Mexican President Enrique Peña Nieto onto a conference call.

"It's an incredible deal for both parties", said Trump of the new arrangements.

The breakthrough increases pressure on Canada, which has been on the sidelines, to rejoin negotiations with the US and Mexico.

Trump said Monday during an Oval Office event that he'll be calling the emerging agreement the "United States-Mexico Trade Agreement".

U.S. Trade Rep. Robert Lightizer said the deal will likely be sent to Congress on Friday and signed in November. However, while the US and Mexico have reached tentative agreement, they're working under a tight deadline, hoping to have things finalized before Mexican President-elect Andrés Manuel López Obrador is sworn in on December 1. "It will either be a tariff on cars, or it will be a negotiated deal; and frankly a tariff on cars is a much easier way to go, but perhaps the other would be much better for Canada".

Reporters have been waiting all weekend for the USA and Mexico to announce their handshake deal. A percentage of workers for auto manufacturers would also have to make more than $16 an hour. President Donald Trump's fresh outburst at Canada on Monday will also make it hard to close the pact by the end of this week.

Behind the scenes, though, the Trump administration is attempting to get Canada to sign off on a trilateral deal, and Trump's words could be viewed as a threat for Canada to get onboard as quickly as possible.


Canada's Foreign Affairs Minister, Chrystia Freeland, said recently she was waiting on the USA and Mexico to resolve their differences on automotive rules of origin before returning to the table.

USA law requires a three-month waiting period after a deal is completed before Congress can ratify it. Mexico will swear in its incoming president, Andrés Manuel López Obrador, on December 1.

He said it would be replaced in part by the newly named United States-Mexico Trade Agreement. He said Canada wants to "negotiate very badly".

The Trump administration said the deal improves labor provisions.

Top American and Mexican officials concluded a marathon negotiating session in Washington Monday with an agreement on new content rules for the auto sector and several other bilateral matters that had proven major sticking points in the talks.

Advisers of incoming President Lopez Obrador hailed the new deal, saying it represented progress on energy and wages for Mexico's workers. Trump flipped states like Michigan, Pennsylvania, and OH from Democrat to Republican in 2016 by promising economic prosperity in part by improving trade deals.

Talks will resume at 9am (1300 GMT) Monday, Guajardo said.

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