Trump sets stage for Nafta overhaul with US-Mexico 'understanding'

Devin Lawrence
August 27, 2018

They will now likely re-engage with Canada to reach a final deal on NAFTA, a primary goal of the Trump administration.

Negotiations centered on revisions to portions of the 1994 North American Free Trade Agreement, notably those involving auto manufacturing, which President Donald Trump has criticized for their imbalances.

Speaking at the White House on Monday, President Trump said he wanted to change the NAFTA name to the U.S. Mexico Free Trade Agreement.

Canada, so far, has been excluded from the talks as Mexico and the USA resolve their issues.

The Commander-in-Chief addressed the American people from the Oval Office Monday afternoon; thanking senior negotiators from both nations for drastically overhauling the 24-year-old agreement the President routinely slammed as "one of the worst deals ever made".

WASHINGTON-In a major advance in NAFTA negotiations, the US and Mexico have come to a preliminary deal on new North American rules for automotive manufacturing and on other key issues, USA news outlets reported on Monday. Under U.S. trade law, Congress must be notified 90 days before voting on the deal, meaning notification must happen this week to meet the timeline.

The last stipulation helps the USA and Canada, where wages tend to be higher, and fixes a long time gripe of those who opposed NAFTA, by reducing the incentive for auto manufacturers to move factories to Mexico where workers can be paid lower wages than is legal in the US and Canada.

"It will be necessary for Canada to rejoin the negotiations and for an agreement to be reached among all parties before a judgement can be made".

The U.S. push to finish NAFTA talks comes at the same time it's in a spiralling trade war with China, and has threatened to place tariffs on cars imported from major manufacturing centres in Asia and Europe - efforts that have created new uncertainty for many businesses and investors. Use of more local steel, aluminum and auto parts will be required, and a certain proportion of the vehicle must be made by workers earning at least $16 per hour, which would benefit the United States and Canada.

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After the election, the new president-elect's team met with USA representatives and joined the negotiations as a sign of goodwill.

The United States has reached a trade deal with Mexico on Monday while Canada remains on the sidelines of the North American trade talks. Currently, about 62% of parts are required to be produced in the United States, Mexico or Canada.

USA law requires a three-month waiting period after a deal is completed before Congress can ratify it. Mexico will swear in its incoming president, Andrés Manuel López Obrador, on December 1.

Talks to overhaul the Nafta agreement began a year ago and have proven contentious.

"Canada is encouraged by the continued optimism shown by our negotiating partners", said a spokesperson for Canadian Minister of Foreign Affairs Chrystia Freeland.

The president says he will be calling Canadian Prime Minister Justin Trudeau.

Trump says that on Friday, the Mexican deal will go to the lawmakers. He then congratulated him on the new deal with the cameras rolling.

Talks will resume at 9am (1300 GMT) Monday, Guajardo said.

In the moments leading up to the call, Trump struggled to figure out how the heck the phone works, which wound up being a painfully awkward sight worthy of the Veep closing credit treatment.

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