Mexico, the U.S., and Canada sign USMCA trade agreement
Closeup of the flags of the North American Free Trade Agreement NAFTA members - Photo: File photo/EL UNIVERSAL

Mexico, the U.S., and Canada sign USMCA trade agreement

10/12/2019
14:38
Reuters
Mexico City
David Lawder, Abraham Gonzalez, Dan Burns, Frank Jack Daniel, Nick Zieminski, Diego Ore, Daina Beth Solomon & Peter Cooney/REUTERS
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The United States, Mexico, Canada Trade Agreement would replace the North American Free Trade Agreement (NAFTA), a regional pact in place since 1994 that encompasses USD $1.2 trillion in annual trade across the continent

Canada, Mexico, and the United States have agreed to a fresh overhaul of their quarter-century-old regional trade pact after negotiators approved changes to a preliminary deal struck last year, and officials signed the new agreement on Tuesday.

The deal, which still needs the approval of lawmakers in all three countries, adds more stringent oversight of the pact’s labor provisions demanded by U.S. Democrats, changes that Speaker of the House Nancy Pelosi said made it an “infinitely better” deal than the one struck between the Trump administration, Canada, and Mexico in 2018.

The United States, Mexico, Canada Trade Agreement, or USMCA, would replace the North American Free Trade Agreement (NAFTA), a regional pact in place since 1994 that encompasses USD $1.2 trillion in annual trade across the continent. Its backers say it is responsible for 12 million U.S. jobs and a third of all U.S. agricultural exports.

U.S. President Donald Trump launched a renegotiation of NAFTA in his first year in office, intent on delivering on his 2016 campaign promise to replace what he has derided as the “worst deal ever.” Canadian and Mexican leaders reluctantly agreed to join the negotiations with their largest trading partner.

Did you know Mexico rejected U.S. labor demands on USMCA?

“America’s great USMCA Trade Bill is looking good. It will be the best and most important trade deal ever made by the USA. Good for everybody - Farmers, Manufacturers, Energy, Unions - tremendous support,” Trump tweeted on Tuesday. “Importantly, we will finally end our Country’s worst Trade Deal, NAFTA!”

For Democrats, the deal serves as a retort to Trump’s and Republicans’ assertions that their only agenda was pursuing his impeachment. Also on Tuesday, Democrats in the House of Representatives announced formal charges against Trump that accuse him of abusing power and obstructing Congress, making him only the fourth U.S. president in history to face impeachment.

Agreement on a final USMCA text follows more than a year of delays, led primarily by Democrats and U.S. organized labor, that at times threatened to scuttle a deal originally struck in the fall of 2018. Tuesday’s announcements came after several intense days of negotiations with Mexico over proposed changes to clauses concerning steel and aluminum, biologic drugs, and internet services, as well as the new labor provisions.

Pelosi said she was unable to succeed in pressing Democrats’ demands for the removal of liability protections for internet service providers, a provision she had called a “giveaway” to big tech companies.

A signing ceremony took place in Mexico City at noon local time (1300 ET), attended by Mexico President Andrés Manuel López Obrador, Canadian Deputy Prime Minister Chrystia Freeland, U.S. Trade Representative Robert Lighthizer, and U.S. White House adviser Jared Kushner, a senior Mexican official said on Twitter. “On our end, there is now a deal. We’re convinced that it’s a good deal for Mexico, just as it is for Canada and the United States,” López Obrador said, adding that the signing would happen in Mexico’s historic National Palace. He expects Mexican lawmakers to back the deal.

Did you know AMLO vowed wage increases to ensure USMCA ratification?

U.S. House Ways and Means Committee Chairman Richard Neal said sections of the text would be reviewed by lawmakers, but he saw no reason for “unnecessary delays” in bringing the trade pact to a vote on the House floor. It is expected to pass the Senate.

On Sunday, Mexico’s Foreign Affairs Minister Marcelo Ebrard said Mexico would accept a U.S. demand on steel in the USMCA if the rule took effect at least five years after the trade pact’s ratification.

Earlier this year, Mexican lawmakers approved the deal, known as USMCA, which would replace the North American Free Trade Agreement. But Democratic lawmakers have held up U.S. ratification over concerns about how labor and environmental provisions would be enforced.

U.S. Trade Representative Robert Lighthizer also made a last-minute demand to restrict the definition of what would constitute North American steel and aluminum under automotive rules of origin, calling for the metals to be “melted and poured” only in North America.

Did you know President López Obrador met with U.S. Democrats to discuss trade and labor?

“Mexico has shared that this would bring lots of problems,” Ebrard told reporters, adding that Jesús Seade, Mexico’s top negotiator for USMCA, would travel to Washington within hours to present Mexico’s terms.

“We will tell (the United States) that we will not accept, in any form, for this obligation to take effect the moment the treaty is ratified,” Ebrard said.

Mexico would allow the rule for steel to be enforced after at least five years but not accept the tighter rule for aluminum because the country does not produce the metal’s raw materials, Ebrard said.

U.S. negotiators had also pushed Mexico to impose tougher controls on its labor standards, including allowing U.S. inspectors to supervise their implementation in Mexico.

Ebrard reiterated the Mexican government’s rejection of that proposal but said Mexico would allow panels composed of experts and a third party to review labor standards.

The USMCA, signed about a year ago, must be passed by lawmakers in all three countries, including the U.S. Congress.

Canada has said it is waiting on ratification in order to move in tandem with the United States.

Did you know the Trump impeachment could have derailed USMCA?

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