Trade Cases

U.S., Mexico, Canada Sign New Trade Deal

December 2, 2018

A new North American trade agreement was signed on Friday by leaders of the U.S., Mexico and Canada at the G20 Summit in Buenos Aires. The U.S-Mexico-Canada Agreement, as it will be called by the United States, failed to address the Section 232 tariffs that were at the root of contentious negotiations.

“The USMCA is the largest, most significant, modern and balanced trade agreement in history,” said Trump at the signing ceremony. The agreement will help bring jobs back to the U.S., particularly in the automotive industry, said Trump. “Many many jobs are already planning to come back.”

Mexico’s outgoing President Enrique Pena Nieto signed the agreement on his last day in office. “The agreement that we will sign today expresses the shared will by our three nations to work together towards the well-being and prosperity of each of our societies,” he said.

Following the signing, Pena Nieto and Trump held up their signed agreements, but Canadian Prime Minister Justin Trudeau chose not to join the two in celebration. “The new North American Free Trade Agreement maintains stability for Canada’s entire economy – stability that’s essential for the millions of jobs and middle-class families across the country that rely on strong, reliable trading relationships with our closest neighbors. That’s why I’m here today,” Trudeau said. “The new agreement lifts the risk of serious economic uncertainty that lingers throughout a trade negotiation process. Uncertainty that would have only gotten worse and more damaging had we not gotten a new NAFTA.”

Trudeau continued, acknowledging the GM plant closures and addressing the tariff issue as he spoke on the podium next to Trump. “We need to keep working to remove the tariffs on steel and aluminum between our countries,” said Trudeau. “With hard work, goodwill and determination, I’m confident we will get there. Our shared interests, prosperity and security demand it.”

The most significant changes in the agreement include new rules of origin for North American autos and auto parts and a requirement that at least 40 percent of auto content be made by workers paid at least $16 per hour. A dispute mechanism that the U.S. tried hard to eliminate was preserved. Canada conceded some of its dairy market to the U.S. and a new chapter on digital trade was added.

U.S. Trade Representative Robert Lighthizer expressed confidence that Congress will approve the new trade agreement, saying he believes it will “get the support of a lot of Democrats.”

Lighthizer could not shed light on when the Section 232 issue would be resolved with Mexico and Canada, telling reporters that talks would continue next week.

“For us, we want an agreement that is fair to Mexico and fair to Canada but maintains the integrity of the president’s steel and aluminum programs, which we view as very successful for the United States,” said Lighthizer. He added the administration “does not want to do anything that will thwart” the expansion and opening of new steel mills in the U.S.

“So, what the president has asked me to do is to find a way forward that is satisfactory to the Mexicans and to the Canadians, in separate agreements, to the American industry and to the American consumers. And I think we have some ideas on that. We have been talking about that for the last few months,” he said.

The U.S. International Trade Commission has 105 days to deliver a report to Congress on the economic impact of the agreement.