President Donald Trump said he intends to terminate the North American Free Trade Agreement and call its replacement “the United States-Mexico Trade Agreement” — a name that would exclude the third NAFTA partner, Canada.
Trump made the comments after announcing an “understanding” with Mexico that could lead to an overhaul of the 24-year-old trade pact, which Trump has called a job-killing “disaster.”
Details of the U.S.-Mexico agreement were expected to be unveiled today [Macau time].
The president says he will be calling Canadian Prime Minister Justin Trudeau. Trump says, “If they’d like to negotiate fairly, we’ll do that.” He also threatened to tax Canadian auto imports to increase the pressure on Canada’s government.
Trump says: “We could have a separate deal [with Canada] or we could put it into this deal.”
U.S. Trade Rep. Robert Lightizer and Mexican Secretary of Economy Idelfonso Guajardo walked together into the White House without talking to reporters. The delegation also included Jesus Seade, a World Trade Organization veteran tapped by Mexican President-elect Andres Manuel Lopez Obrador as his future chief trade negotiator.
“A big deal looking good with Mexico!” Trump tweeted yesterday. Earlier, Guajardo told reporters, “There is one very important issue to finish.”
U.S. and Mexican negotiators worked over the weekend to narrow their differences.
“There likely will be a deal today,” said Daniel Ujczo, a trade attorney with Dickinson Wright PLLC who has followed the NAFTA talks closely.
Once they reach an agreement, the third country in NAFTA — Canada — would be brought back in to finalize a revamp of the 24-year-old pact. But the countries still must resolve difficult issues, including U.S. complaints about Canada’s protection for its dairy farmers and the way disputes are resolved under NAFTA.
Adam Austen, a spokesman for Canadian Foreign Minister Chrystia Freeland, said: “Canada is encouraged by the continued optimism shown by our negotiating partners. Progress between Mexico and the United States is a necessary requirement for any renewed NAFTA agreement.”
Austen said the Canadians had been regular contact with the NAFTA negotiators.
“We will only sign a new NAFTA that is good for Canada and good for the middle class,” he said, adding that “Canada’s signature is required.”
NAFTA reduced most trade barriers between the three countries. But Trump and other critics say it encouraged U.S. manufacturers to move south of the border to exploit low-wage Mexican labor.
Talks to overhaul the agreement began a year ago and have proven contentious.The Trump administration wants a higher percentage of auto production to come from within the NAFTA bloc before qualifying for duty-free status.
Talks have also been stymied by the Trump administration’s insistence on a “sunset clause” that would end NAFTA in five years unless all three countries agreed to continue it. AP
Trump did to Mexico, what was required to have a more balanced perspective with the automobile aspect. The car changes affects 40% of the Mexican Free trade agreement, totaling $200 Billion dollars, by changing the parts aspect from 62.5% to 75 % that must be made in Mexico and USA, the USA will save 10s of billions of dollars over the 16 year new contract. Also, Mexico can only increase production to ship into USA by 14% over the next 16 years, thus car manufacturing will occur in the USA. Thus more American Jobs.
Also, the no tariff scenario on Agriculture, will once again enhance soyabean sales into Mexico.
This adversely affects China, the same with the deal with Natural gas and soybeans to the European Union, will put pressure on China.
Canada will be next, and after that will be Japan. Than the table has been set for the trade war with China, with the deck being loaded so that China agrees to put a leash on North Korea, and a reduction of China Trade Deficits to $150 Bn a year