President Donald Trump said the U.S. is pursuing a new trade accord with Mexico to replace the North American Free Trade Agreement and called on Canada to join the deal soon or risk being left out.
Trump announced the agreement with Mexico in a hastily arranged Oval Office event Monday with Mexican President Enrique Pena Nieto joining by conference call. Pena Nieto said he is "quite hopeful" Canada would soon be incorporated in the revised agreement, while Trump said that remains to be seen but that he wanted those negotiations to begin quickly.
Canadian Foreign Minister Chrystia Freeland is leaving a trip in Europe early to travel to Washington for NAFTA talks today, spokesman Adam Austen said on Monday. Canada and the U.S. are still at odds over some key issues.
As he announced the move, Trump said he would drop the name NAFTA from the accord because of its unpopularity.
"We're going to call it the United States/Mexico Trade Agreement," he said. NAFTA "has a bad connotation because the United States was hurt very badly by NAFTA for many years."
The U.S. and Mexico agreed to increase regional automotive content to 75 percent from the current 62.5 percent in NAFTA, with 40 percent to 45 percent of production by workers earning at least $16 an hour, the U.S. trade representative's office said in an emailed statement. They agreed to review the deal after six years, softening a demand by the U.S. for a clause to kill the pact after five years unless it's renewed by all parties. Duty-free access for agricultural products will remain in place, the trade representative's office said.
The deal would strengthen protections for U.S. copyright holders, while allowing "safe harbors" for Internet service providers that inadvertently post pirated material, according to the U.S. The current NAFTA, which predates the rise of online giants such as Facebook Inc., doesn't contain much language on how copyright should be handled in the digital age. The Mexico pact also gives 10 years of data protection for producers of cutting-edge drugs.
Under the new deal, Mexico committed to "specific legislative actions" to recognize workers' rights to collective bargaining, according to the U.S. The two countries agreed to create separate chapters for labor and the environment; the current NAFTA doesn't cover those subjects in the main body of the agreement.
The deal does not resolve the tariffs the Trump administration put on steel and aluminum earlier this year, taxes that have proved to be a major sticking point in trade relations and have led to Mexican retaliation against U.S. goods. It also does not resolve a broader issue over what are known as "232 tariffs" -- taxes on foreign goods that the Trump administration has imposed in the name of national security. The administration used that process for the steel and aluminum tariffs, over the strong objections of many U.S. allies and trading partners -- including Canada. And Trump is currently considering 232 tariffs on foreign autos.
Both the Mexicans and Americans have been eager to reach a fully revised NAFTA deal by the end of this month, which would give the Trump administration enough time to notify Congress that a deal had been finalized and still have that deal be signed by the outgoing Mexican administration of Pena Nieto.
The deal was welcomed by at least two Arkansas Republicans -- U.S. Sen. John Boozman and U.S. Rep. French Hill.
"Solidifying our partnership with Mexico while improving the terms of our trade agreement is a positive, welcome development," Boozman said in a statement. "It moves us one step closer to ensuring Arkansas' businesses and agriculture industry maintain access to this crucial market. I congratulate the president and his team and look forward to a comprehensive deal being reached quickly."
Hill said in a statement that he was pleased at the progress, and hoped that "Canada will now come to the table and we can achieve a productive three-way agreement. I will carefully review and work with my colleagues in Congress, and those I represent in central Arkansas, to ensure our American workers, farmers, and job creators benefit from the ultimately proposed amendments."
While the president hailed it as "a big day for trade," groups representing American workers and companies withheld full endorsements.
The Business Roundtable, which represents CEOs at major U.S. companies, said it was encouraged by the progress but said NAFTA "must remain trilateral" and is concerned the announcement might not signal an improvement. A coalition of five unions including the AFL-CIO and United Steelworkers said more work is needed to fix NAFTA. "We are not done yet," the unions said in a statement.
An accord between the U.S. and Mexico is the biggest development in talks that began a year ago, punctuated by Trump's repeated threats to quit altogether. Significant breakthroughs came during the past several days of bilateral talks on automobiles and energy. The three countries trade more than $1 trillion annually, much of it under the pact.
But questions remain about how the Trump administration will steer a deal through Congress, and whether Canada will be part of the final pact. Trump has been authorized by Congress to seek a new NAFTA through his so-called fast-track authority, which allows the president to submit trade deals to lawmakers for a basic yes-or-no vote, provided the administration follows certain procedures.
The U.S. plans to submit a letter to Congress on Friday, Trump's trade representative, Robert Lighthizer, said Monday. The U.S. hopes Canada will join the pact this week, but it will have the option to sign on later, he said. That suggests the administration believes it has congressional authority to move ahead with its current plan as a two-way deal.
But some experts are less certain. Trump would have to go back to Congress to ratify a bilateral agreement with Mexico, said Mickey Kantor, who oversaw America's entry into NAFTA as Bill Clinton's first U.S. trade representative.
Republican Sen. Orrin Hatch, chairman of the Senate Finance Committee, called the deal with Mexico an important step but added that "a final agreement should include Canada." As the main trade committee in the Senate, the finance panel's approval will be key to any deal.
Canada, which has been on the sidelines of the talks since July as Mexico and the U.S focused on settling differences, said an overhaul of the trilateral pact will still require its endorsement. "Canada's signature is required," Austen, Freeland's spokesman, said in an email on Monday. "We will only sign a new NAFTA that is good for Canada and good for the middle class."
The president's apparent willingness to move on without Canada prompted confusion and concern among lawmakers, who said it may not be legally permissible, let alone smart, and businesses whose supply chains depend on a deal encompassing Canada, Mexico and the United States.
"Because of the massive amount of movement of goods between the three countries and the integration of operations which make manufacturing in our country more competitive, it is imperative that a trilateral agreement be inked," Jay Timmons, president and chief executive of the National Association of Manufacturers, said in a statement.
Matthew Shay, president and chief executive officer of the National Retail Federation, said in a statement that "coming to terms with Mexico is an encouraging sign, but threatening to pull out of the existing agreement is not. NAFTA supports millions of U.S. jobs and provides hardworking American families access to more products at lower prices. To preserve these benefits and protect complex, sophisticated and efficient supply chains, the administration must bring Canada, an essential trading partner, back to the bargaining table and deliver a trilateral deal."
Information for this article was contributed by Eric Martin, Jennifer Jacobs, Josh Wingrove, Andrew Mayeda, Mark Niquette, Shawn Donnan and Dan Kraut of Bloomberg News; by Ana Swanson, Katie Rogers and Alan Rappeport of The New York Times; and by Heather Long of The Washington Post.
A Section on 08/28/2018