U.S. President Donald Trump announced a new trade agreement with Mexico Monday that he says will replace the North American Free Trade Agreement.
The Americans are now set to negotiate to see if Canada can be part of it, he said, suggesting that if Canada is prepared to negotiate fairly it should be simple. He also said that the U.S. would put automotive tariffs on Canadian imports if talks don’t succeed.
“They want a negotiated deal very badly,” Trump said of Canada, adding that just putting on the car tariffs would be easier to do.
Trump said the name NAFTA has a “lot of bad connotations to a lot of people” and suggested renaming the agreement the U.S.-Mexico free trade agreement.
But while he was speaking to reporters in the Oval Office, he had Mexican President Enrique Pena Nieto on speakerphone. After a few technical difficulties establishing the call, Pena Nieto emphasized repeatedly that Canada now needed to join the talks so it could be incorporated into the agreement.
The Mexican president said that negotiations are now required on “sensitive” bilateral matters between the U.S. and Canada.
U.S. trade representative Robert Lighthizer, who was congratulated by Trump for reaching the deal with Mexico, said they hoped to conclude talks with Canada by Friday in order to comply with the 90-day window required by Congress before a deal could be signed with the outgoing Mexican administration. Pena Nieto leaves office on Dec. 1.
High-stakes talks now with Canada
Trump again mentioned Canada’s “300 per cent” dairy tariffs as an issue between the two countries, saying U.S. manufacturers and farmers will be very happy with this deal because Mexico will begin buying much more farm products from the U.S.
However, it remains unclear if the U.S. has withdrawn its steel and aluminum tariffs on Mexican imports. Mexico retaliated with high tariffs on some U.S. farm exports in return.
Earlier Monday, Mexico’s economy minister, Ildefonso Guajardo, told reporters on his way into his fifth week of bilateral meetings with the Americans that he still had to conclude a “very important” issue. It’s unclear whether this issue is now resolved.
Mexico’s economy minister, Ildefonso Guajardo, seen here last Thursday, is in his fifth week of talks in Washington with United States trade representative Robert Lighthizer. (Chris Wattie/Reuters)
Additional briefings are planned later Monday to clarify the exact contents of the deal.
The U.S.-Mexico negotiators have been trying to make a breakthrough on the deal’s automotive chapter, after talks to redefine what should constitute a tariff-free North American vehicle broke down prior to the Mexican presidential election in July.
Reuters is reporting that the revised rules would require 75 per cent of auto content to be made in the United States and Mexico, up from 62.5 per cent, and 40 per cent to 45 per cent of auto content to be made by workers earning at least $16 per hour.
It’s unclear, however, what will happen to automotive imports from Mexico that do not comply with these new rules. The U.S. tariff for non-NAFTA car imports is currently 2.5 per cent, a rate that does not provide a significant incentive to make costly changes to comply with the new rules.
Canada was not part of the marathon talks, now in their fifth week in Washington.
Freeland in Europe
Foreign Affairs Minister Chrystia Freeland is on government business in Germany, but received updates from both the Americans and the Mexicans throughout the weekend. She has said that Canada’s encouraged by recent reports.
“Progress between Mexico and the United States is a necessary requirement for any renewed NAFTA agreement,” Freeland’s spokesperson Adam Austen wrote to CBC News before Trump’s announcement. “We will only sign a new NAFTA that is good for Canada and good for the middle class.”
“Canada’s signature is required,” he said.
Guajardo said Sunday that once Canada returns to the table the three parties would need at least another week of negotiations.
In a tweet prior to Trump’s announcement, Pena Nieto said he had spoken to Prime Minister Justin Trudeau to express the importance of Canada rejoining the trilateral talks this week.
Hablé con el Primer Ministro de Canadá, <a href=”https://twitter.com/JustinTrudeau?ref_src=twsrc%5Etfw”>@JustinTrudeau</a>, sobre el estado de las negociaciones del TLCAN y el avance entre México y EUA. Le expresé la importancia de su reincorporación al proceso, con la finalidad de concluir una negociación trilateral esta misma semana.
A release from Trudeau’s office Monday confirmed the pair spoke on Sunday and discussed the ongoing negotiations.