A new deal was reached Monday between Mexico and the US to replace the North American Free Trade Agreement (NAFTA), according to CNBC. Trump has taken issue with NAFTA and called for a renewed round of negotiations for a deal that he says will better serve the interests of Americans. The new agreement will be called the United States-Mexico Trade Agreement, according to Trump.
“The name NAFTA has a bad connotation because the United States was hurt very badly by NAFTA,” he said. “We’ve made it better” for both Mexico, the US, and farmers and manufacturers in particular, he added.
US Trade Representative Robert Lighthizer says the agreement will last 16 years with reviews every six years, and will uphold the current steel and aluminum tariffs, but will not cap imports of light vehicles from Mexico.
Trump also said that Mexican representatives committed to buying as many US agricultural products as possible.
“We’re very excited about this agreement. We think it is going to lead to more trade, not less trade,” according to Lighthizer.
The outcome is the culmination of an effort to complete a new agreement before December 1st when Mexico’s current president is replaced by Andres Manuel Lopez Obrador, a leftist.
Former US trade representative and chief NAFTA negotiator Carla Hills told CNBC:
“I’m certainly hopeful that we get a good agreement,” she said, noting that NAFTA is “25 years old and it needs to be upgraded. I have my fingers crossed that we’ve done a good job and we get to NAFTA 2.0.”
Canada had been sitting out the negotiations while the US and Mexico worked through their own bilateral trade issues, but has rejoined the talks this week. Trump has threatened to proceed with a bilateral deal with only Mexico if Canada does not accept new terms on issues like autos trade, dispute settlement, and intellectual property rules, according to Reuters, and the new agreement with Mexico will contribute to this pressure.
“Once the bilateral issues get resolved, Canada will be joining the talks to work on both bilateral issues and our trilateral issues,” according to Canadian Foreign Minister, Chrystia Freeland.
And despite tough talk from Trump, US Treasury Secretary Steven Mnuchin told CNBC:
“The US market and the Canadian markets are very intertwined. It’s important for them to get this deal and it’s important for us to get this deal.”
Trade between the US, Mexico, and Canada totals over $1.2 trillion each year. The relatively tense negotiations have put pressure on both the Peso and the Canadian Dollar, though both currencies gained against the US dollar on Monday.