Mexico, US reach a deal on trade
Trump: 16-year agreement will replace NAFTA — now, what about Canada?
WASHINGTON >> The Trump administration said Monday it had reached a new, 16-year trade deal with Mexico, setting in motion a rapid chain of events that could redraw the world’s largest trade agreement.
The ultimate scope of the deal could hinge on whether Canadian Prime Minister Justin Trudeau, after months of feuding with President Donald Trump, decides to sign on.
White House officials said the agreement, centered largely on manufacturing, would help U.S. workers by making it harder for countries like China to ship cheap products through Mexico and then into the United States.
Harmonizing labor and environmental rules would also protect U.S. jobs and salaries, the officials said, by making it less attractive for U.S. companies to move operations to Mexico. Justin Trudeau, Canada’s prime minister, must decide whether he wants to sign on to the new deal.
A senior administration official acknowledged the changes could make certain products, such as automobiles, more expensive for American buyers because the costs that go into production were expected to increase.
A number of key factors remain unresolved in Trump’s effort to replace the North American Free Trade Agreement — with Canada’s role the biggest among them. Trump and Mexican leaders also failed to resolve whether the U.S. tariffs on metals imports will remain in place.
The next phase of negotiations will pose a major test for Trump’s unique style of diplomacy, which has shown flashes of both creativity and impulsiveness throughout the process.
“It’s a big day for trade. It’s a big day for our country,” Trump told reporters gathered in the Oval Office, where they watched him speak at length by phone with Mexican President Enrique Peña Nieto.
Trump has long told top advisers that once he was able to cut a single trade deal with another country, it would lead to a flurry of agreements. That’s because it would prove to other leaders that he is serious about cutting deals. Some aides are hopeful that the Mexico agreement could serve as a template for other talks.
But Trump also has a tendency to tout deals before they are complete, and a rebuke from either Congress or Canada could scuttle the talks before they are finalized.
Top White House officials appeared split on whether they
would proceed at all if Canada didn’t sign on to the agreement. Trump left open the possibility of cutting Canada out of the final deal, but U.S. Trade Representative Robert Lighthizer told reporters later that every effort would be made to include Canada, even if it took weeks or longer for them to agree to changes.
There were also signs of division about what the agreement means for NAFTA. Trump said that the new deal with Mexico would lead to the termination of NAFTA and that he would rename it the United States-Mexico Trade Agreement. “NAFTA has a lot of bad connotations for the United States because it was a rip-off,” Trump said.
He said that he would terminate “the existing deal,” although it was unclear whether Trump has the power to do so unilaterally and Lighthizer cautioned that no decision had been made about this.
Lighthizer said the White House planned to send Congress a letter by Friday that formally starts a 90-day process for changing NAFTA. He said it was still unclear precisely what the letter would say. It could say the United States has reached a deal with Mexico, he said, or it could say that an agreement has been reached with Mexico in the hopes that Canada would be brought into the package at a later date.
The agreement announced Monday will run for an initial 16 years, with an option to revisit issues in six years, and to extend for another 16 years.
It would increase the percentage of each car that must be made in the United States or Mexico to qualify for duty-free treatment. Currently 62.5 percent, the figure would go up to 75 percent.