The United States and Mexico announced a preliminary deal on Monday, Aug 27 to change the North American Free Trade Agreement (NAFTA) but Canada has yet to agree.
“They used to call it NAFTA. We’re going to call it the United States-Mexico trade agreement. We’ll get rid of the name NAFTA,” President Trump told reporters. The name had a “bad connotation,” Trump said.
Canada is encouraged by the continued optimism shown by its NAFTA partners and will continue to negotiate for a deal, but will only sign a new agreement that is good for Canada, We will only sign a new NAFTA that is good for Canada and good for the middle class,” said a spokesman for Foreign Minister Chrystia Freeland
The agreement lifted financial markets and opens the door for Canada to return to the negotiations to rework the 1994 U.S.-Canada-Mexico trade deal. A senior U.S. trade official said there are hopes that a final agreement can be reached by Friday reports Global TV
Negotiations between the three trade partners have dragged on for more than a year, and repeated threats by Trump that he would ditch the accord have roiled financial markets, putting pressure on the Mexican peso and the Canadian dollar.
Trump said he would talk to Canadian Prime Minister Justin Trudeau soon – though he previously threatened that it would be easier to put tariffs on Canadian cars instead of including Canada in the agreement with Mexico.
The Mexico-U.S. discussions focused on crafting new rules for the automotive industry, which Trump has put at the heart of his drive to rework the pact he has repeatedly described as a “disaster” for American workers.
The U.S.-Mexico deal would require 75 percent of auto content to be made in the NAFTA region, up from the current level of 62.5 percent, a second U.S. official said. A draft fact sheet specified the content would be made in the United States and Mexico.
The deal also would require 40 percent to 45 percent of auto content to be made by workers earning at least $16 per hour, the second official said.
“We are now inviting the Canadians in as well and hope that we can reach a fair and successful conclusion with them as well,” a senior U.S. trade official told Reuters
Mexican stocks jumped 1.4 percent to a seven-month high, while the peso firmed about 1.3 percent against the dollar, heading for its best one-day gain in more than a month.
The United States, Mexico, and Canada do more than 1 trillion dollars in trade between them every year.