Preliminary US-Mexico trade deal, Canada uncertain

The United States and Mexico have reached a preliminary trade agreement designed to replace NAFTA, but there is uncertainty over where this puts Canada, who were also a part of NAFTA.

Fox (via Christian Whiton, whowas a senior advisor in the Donald Trump and George W. Bush administrations): Trump replaces NAFTA and triumphs — New trade deal with Mexico is YUGE win for both countries

President Trump won a major victory on trade on Monday, supplanting the North American Free Trade Agreement (NAFTA) and replacing it with something far more beneficial. The new deal will help American workers and manufacturers. It’s also a win for Mexico.

One of the most fundamental parts of Trump’s campaign for president was his promise to change America’s deeply flawed trade arrangements.

Second only to the booming economy, Monday’s announcement of a deal with Mexico is the most visible manifestation of Trump’s fulfilment of his campaign promises.

This victory will lead to others.  The leftwing government of Canada, the other member of NAFTA, had refused to negotiate seriously, perhaps believing their friends in the progressive commentariat predicting Trump’s demise.

Canada’s foreign minister, Chrystia Freeland, spent most of her time on visits to the U.S. lobbying governors and congressmen rather than talking seriously to our trade negotiators.  Her boss, Prime Minister Justin Trudeau, even though it was a good idea to antagonize Trump at his failed G7 summit in June.

Canada must now return, hat in hand, for a deal.  If not, Trump will advance the deal with Mexico and leave Canada behind.

The European Union and China will also be greatly concerned about the Mexico deal—and more likely to negotiate seriously.

I’m not sure why the European Union and China will be concerned by this.

The deal with Mexico and Canada’s likely about-face puts pressure on Europe to level the playing field for trade or face higher tariffs.

The same factors apply to China, which is dependent on selling goods to the USA and stealing our companies’ intellectual property.

Trump has utterly flipped the script with China, which our elite effectively told us would supplant us economically and strategically, and with which we had to accept unfair trade factors. Now, China is reeling and American is ascendant. Those who bet on China over the USA chose poorly.

I’m not sure that repairing relations with Mexico and reaching a preliminary trade agreement with them will have that much impact.

New York Times has less of a cheerleader report: Preliminary Nafta Deal Reached Between U.S. and Mexico

The United States and Mexico have reached agreement to revise key portions of the 24-year-old North American Free Trade Agreement, a crucial step toward revamping a trade pact that has appeared on the brink of collapse during the past year of negotiations.

The agreement with Mexico gives Mr. Trump a significant win in a trade war he has started with countries around the globe but it falls far short of actually revising Nafta. The preliminary agreement still excludes Canada, which has been absent from talks held in Washington in recent weeks.

“They used to call it Nafta,” Mr. Trump said. “We’re going to call it the United States Mexico Trade Agreement,” adding that the term Nafta had “a bad connotation” for the United States, which he said had been taken advantage of by the trade deal.

Typically odd comments from Trump. NAFTA was a three country agreement, this is a two party agreement.

In a series of tweets on Monday, Mr. Nieto said that he had also spoken to Justin Trudeau, the Canadian prime minister, and that he was working toward a three-way agreement with the United States and Canada by the end of the week.

“I expressed the importance of his reinstatement in the process,” Mr. Peña Nieto said in Spanish about Mr. Trudeau, “in order to conclude a trilateral negotiation this week.”

Odd also that this has been announced before agreement has been reached with Canada. Their inclusion may be some time away.

Mr. Trump, however, seemed to hedge the possibility, saying “we’ll see if Canada can be part” of any deal, and that separate negotiations would start soon.

Mr. Trump said that he would be calling Mr. Trudeau “very soon” but then immediately groused that the country issued 300 percent tariffs on American dairy products. The president suggested that the United States might add tariffs to Canadian car imports in response, reiterating a threat he has used frequently to push trade partners to the negotiation table.

While Canada has not been a party to recent discussions, the potential for a two-country deal appears highly unlikely, given opposition by Mexico, American lawmakers and North American industries whose supply chains rely on all three countries.

Instead, Mr. Trump’s threats against Canada could prove to be a negotiating tactic.

On Monday, Adam Austen, a spokesman for Canadian Foreign Minister Chrystia Freeland, said that Canada is “encouraged” by progress between Mexico and the United States but that “we will only sign a new NAFTA that is good for Canada and good for the middle class.”

On Friday, Ms. Freeland said that Canada would be “happy” to rejoin the talks once the United States and Mexico had made progress on their specific issues. “Once the bilateral issues get resolved, Canada will be joining the talks to work on both bilateral issues and our trilateral issues,” Ms. Freeland said.

This sounds like an odd way to work towards a three country trade agreement.

Both the Mexicans and Americans have been eager to reach a fully revised Nafta deal by the end of August, a date that 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 Enrique Peña Nieto. That goal now looks doubtful, given Canada’s recent absence from the negotiating table.

Still, progress in the negotiations with Mexico will come as a relief to American businesses that depend on trade agreements and have been shaken by Mr. Trump’s confrontational approach to America’s biggest trading partners.

So this looks like a promising step, but it hardly looks likely to lead to a world trade revolution.

2 Comments

  1. NOEL

     /  August 28, 2018

    The Collective Bargining clause to force Mexican wages to be comparable with the US to prevent business flering to low wage countries is interesting.
    Something that was never a part of the original China/NZ agreement when NZ Industry took flight.