New U.S.-Mexico trade agreement is hardly a done deal

New U.S.-Mexico trade agreement is hardly a done deal

On Monday, the United States and Mexico reached a tentative agreement on updates to the North American Free Trade Agreement.

"I like to call this the United States-Mexico Trade Agreement".

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.

Trump's US-Mexico deal announcement had pushed the S&P 500 and Nasdaq indexes to fresh records on Monday, and on Tuesday, Europe and Asia followed Wall Street's lead, inching to multi-month highs.

Until a new deal is signed, the other terms of NAFTA - including the elements that allow us companies to operate tariff-free in Mexico and Canada - remain in place. However, the president affirmed negotiations with Canada will begin "very shortly".

"This is a tremendous thing", Trump said from the Oval Office, adding that he's scrapping the name NAFTA because it "has a lot of bad connotations" and instead is calling this deal "the United States-Mexico Trade Agreement".

A senior administration official indicated the White House plans to submit a letter to Congress on Friday notifying the legislature of the President's plans to sign a new trade deal, with or without Canada's agreement. "They're going to work on that very hard", Trump said.

Adam Austen, a spokesman for the Canadian Foreign Minister, says Canada had been in regular contact with the NAFTA negotiators.

A key focus of the new agreement involves new rules for the digital economy, which didn't really exist when NAFTA was negotiated in the early 1990s.

The deal is the result of five weeks of intense one-on-one talks between the Trump administration and Mexican officials.




This preliminary agreement does not include Canada. Among the negotiations was a USA push to increase the percentage of a auto that had to be sourced from a NAFTA nation to move freely across the border of the three NAFTA nations.

Calling the deal "very good" for USA farmers and manufacturers, Mr Trump said Mexico has agreed to purchase "as much farm product as possible" immediately.

Under the new agreement with Mexico, 75% of the content in automobiles must be sourced in North America to qualify for tariff-free treatment, up from 62.5% under the current Nafta.

Hatch recalled that Canada is the top export market for 36 of the US's 50 states (the top export market for several of the remaining states is Mexico, particularly those on the US's southwest border).

Previously, Mexico had repeatedly said this was a three-party agreement and that the United States and Mexico were just working out bilateral problems with the US.

But Trump hinted that all might not be smooth sailing from here, suggesting he could cut Ottawa out of the deal reached with Mexico and adding that he wanted to change the agreement's name.

Canadian Foreign Minister Chrystia Freeland will travel to Washington, D.C., on Tuesday for negotiations.

"This wasn't created to put pressure on anybody", a senior administration official said, before later adding that the USA planned to submit its NAFTA renegotiation plans to Congress by the end of the week with or without Canada's agreement.

But Trump's claim was met with immediate pushback from the president of Mexico, who had been patched into the makeshift press conference by speakerphone. It also requires that 75 percent of the parts of cars sold in North America be produced in the U.S. or Mexico.

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