
The United States and Mexico have reached a trade agreement, leaving Canada as the odd man out in efforts to revise or replace the North America Free Trade Agreement (NAFTA), according to U.S. President Donald Trump.
Instead, senior United States officials told reporters the agreement had been extended for 16 years but would be reviewed every six years.
"In areas like digital trade, financial services, IP, all of the kinds of things you think of as a new economy, we are setting newest high-level standards that are not only better than NAFTA 1.0, but are also better than TPP or, I would suggest, any other agreement that's been negotiated", said the administration official, who called the new agreement "innovative". Much of the trade pact dealt with auto manufacturing, as Detroit has increasingly seen jobs shipped south of the border where workers earn an average of $7.34 an hour making cars and $3.41 an hour in auto parts suppliers.
The United States and Mexico also agreed to a 16-year lifespan for the North American Free Trade agreement, with a review every six years that can extend the pact for 16 years, US Trade Representative Lighthizer said.
"While the U.S. administration had been given special "fast-track" authority by Congress to seek a new NAFTA deal, it is unclear whether that applies to a bilateral agreement like this one (ie a deal that does not include Canada)". -Mexican agreement, shrugging off Trump's threats that Canada might be frozen out and instead face auto tariffs.
Herman Lawrence, a senior fellow at the CD Howe Institute in Toronto who has extensive experience in US-Canada trade relations, says Canada has been "badly treated" by this divide-and-conquer approach.
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Your move, Congress: Despite Trump's statement from the Oval Office, he does need Congressional approval to sign onto a new deal. He labeled NAFTA "seriously out of whack" in a way that "led to large trade deficits" and said it needed updating.
He said that deal would have to include, among other things, intellectual property reform and a reduction of tariffs on US dairy imports.
"I think with Canada, frankly, the easiest we can do is to tariff their cars coming in".
The agreement between the USA and Mexico on Monday was a significant marker in the yearlong effort to renegotiate the trilateral trade pact, sweeping away key obstacles impacting the U.S. and Mexico that had held up trilateral talks.
He pointed to labor and rules of origin provisions broadly outlined in the Mexico-US deal that he said Trudeau's negotiators are seeking.
But pressed as to whether Mexico is willing to enter a bilateral deal with the U.S., a senior White House official on the same call dodged. Two-way trade between the United States and Canada, at $673 billion a year ago, is larger than that between the United States and Mexico, which came to $616 billion.
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President Donald Trump announced Monday that he plans to end NAFTA and pursue a separate deal with Mexico.
"The deal announced Monday has moving parts and there is still time to make improvements before it is signed and sent to Congress", the Journal's editorial board wrote.
The U.S. and Mexico shook hands on an agreement in principle to update the free-trade agreement, after five weeks of talks that excluded Canada.
"For more clarity, maybe ask the Mexicans", the official said.
Auto manufacturing: The new deal would require that 75% of the parts in any vehicle sold in North America be produced in the United States or Mexico.
US President Trump threatened he could still put tariffs on Canadian-made cars if Canada did not join its neighbours.
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