BREAKING NEWS: US and Mexico reach preliminary NAFTA deal - Global Trade Magazine
  August 27th, 2018 | Written by

BREAKING NEWS: US and Mexico reach preliminary NAFTA deal

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  • Trade relations between the US and Canada have been chilly of late.
  • A two-way revised NAFTA is highly unlikely; it will meet with opposition from Mexico, Congress, and US businesses.
  • US-Mexico NAFTA deal updates the agreement to take the internet and the digital economy into account.

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 chilly of late, in the wake of President Donald Trump’s fierce criticisms of Canada’s trade practices.

A two-way revised NAFTA is highly unlikely, as it will meet with opposition from Mexico, members of Congress, and US businesses.

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.

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 New York Times quoted Canadian Foreign Minister Chrystia Freeland has 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.”

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