US and Mexico Attain Preliminary Trade Deal

The United States and Mexico have reached a preliminary deal on revising the North American Free Trade Agreement (NAFTA).

Finalizing a revised NAFTA now depends on Canada rejoining the talks.

Trade relations between the US and Canada have been unemotional of late, in the wake of President Donald Trump’s ferocious criticisms of Canada’s trade practices.

Some of the changes agreed to by the two parties, update the agreement to take the internet and the digital economy into account, both of which emerged since the agreement was first negotiated. The US has also pressed for changes in the rules of origin governing automobile manufacturing.

A two-way revised NAFTA is highly unlikely, as it will meet with opposition from Mexico, members of Congress, and US businesses. The deal unveiled its goals for renegotiating the North American Free Trade Agreement, a deal that reshaped trade between Canada, Mexico and the United States.

The US-Mexico agreement calls for 75 percent of a vehicle’s value to be made in North America to qualify for zero tariffs. The current rule pegs that at 62.5 percent. Automakers will also be required to use more North American steel, aluminum, and auto parts, and have a certain percentage of the car made by workers earning at least $16 an hour.

Last week the talks stumbled over how additional auto tariffs Trump has threatened would be applied to the new rules of origin. There were also issues concerning opening Mexico’s oil and gas sectors to foreign investments. Those provisions may get pushback from the new Mexican administration that is to take office in December.

The Canadian Foreign Minister Chrystia Freeland was quoted saying that Canada would be “happy” to rejoin the talks once the United States and Mexico had made progress on their issues. “Once the bilateral issues get resolved,” she said, “Canada will be joining the talks to work on both bilateral issues and our trilateral issues.”

Trump also said the deal would now be called US-Mexico Trade Deal and not NAFTA, stating that NAFTA was favourable to the United States.

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