Donald Trump has announced a framework of a new trade deal with Mexico. It’s to be called the United States-Mexico Trade Agreement. Gone would be “Nafta” as Trump believes the name has bad connotations.
Two major thrusts of the new deal are rules that would compel more automobile manufacturing to take place in higher-wage factories and a decision about what proportion of a car needs to be produced in North America.
A big deal looking good with Mexico!
— Donald J. Trump (@realDonaldTrump) August 27, 2018
But what’s really going on here? The bottom line is this is a long way from a done deal. There’s been a sudden rush of negotiations in recent days because Mexico gets a new president on December 1st, a president who would most likely want revisions in any trade pact. Trump has to give Congress 90 days notice of a new deal. For the current Mexican president to sign it, that notification would have to come on August 31st. From The New York Times:
“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.”
Oh, Canada. Yes, our neighbors to the north need to sign off on the deal, or the chances this trade agreement passing Congress would be slim to none.
So, in the coming days, Canada is coming back to the table to work on a three country agreement. And today’s big pronouncement from the White House was really about putting pressure on Justin Trudeau’s government.
“It’s a big day for trade. It’s a big day for our country," says Pres Trump as he announces US-Mexico trade agreement. Says he wants to get rid of the name NAFTA. Thinks it has bad connotations. But says he'll see if Canada can be part of the deal.
— Mark Knoller (@markknoller) August 27, 2018
From Vox:
“However, experts following the talks say that the latest development isn’t a major victory. “I wouldn’t say that the US and Mexico have really reached a NAFTA deal,” Christopher Wilson, a NAFTA expert at the Wilson Center think tank in Washington, DC, told me.Instead, both sides just solved a stingy bilateral trade issue, but not the larger multilateral one with Canada.
“The countries involved are closer to achieving Trump’s dream of a changed NAFTA that mostly helps America, but still not that close — which means the president may be celebrating too early.
“There is still a long road ahead,” says Wilson.”
Congratulations to the Trump administration on reaching a preliminary agreement in principle to begin negotiations with half of America's NAFTA counterparties with a view to revising one section of the trade agreement!
— David Frum (@davidfrum) August 27, 2018