BUENOS AIRES (REUTERS) – The United States, Canada and Mexico signed a North American trade pact on Friday (Nov 30), and President Donald Trump brushed aside difficulties he may have in getting the deal through US Congress, where opposition Democrats will control one of its two chambers.
The leaders of the three countries agreed on a deal in principle to replace the North American Free Trade Agreement (Nafta) that governs more than a trillion dollars of mutual trade after a year and a half of acrimonious negotiations concluded with a late-night bargain just an hour before a deadline on Sept 30.
Friday’s signing potentially ends a big source of irritation for the US administration as it pivots to a much bigger trade fight with China that threatens the global economy. All eyes are on a meeting between Trump and Chinese President Xi Jinping on Saturday (Dec 1) after a G-20 summit in Buenos Aires.
Trump had vowed to revamp Nafta during his 2016 presidential election campaign. He threatened to tear it up and withdraw the US completely at times during the negotiation, which would have left trade between the three neighbors in disarray.
The three countries were still bickering over the finer points of the deal just hours before officials were due to sit down and sign it as the G-20 summit kicked off in Buenos Aires.
“It’s been long and hard. We’ve taken a lot of barbs and a little abuse and we got there,” Trump said after the signing.
Canadian Prime Minister Justin Trudeau still had a few barbs of his own on Friday. He called the deal by its old name Nafta, prodded Trump over US steel and aluminum tariffs and said General Motors Co’s decision to cut production and slash its North American workforce, including in Canada, was a “heavy blow”.
“Donald, it’s all the more reason why we need to keep working to remove the tariffs on steel and aluminum between our two countries,” Trudeau said.
Mexico’s President Enrique Pena Nieto, who awarded Jared Kushner, Trump’s son-in-law and adviser, with Mexico’s highest order for foreigners, was warmer.
On his last day in office, he said the new deal was forged with the “firm belief that we are stronger and more competitive”.
Legislators from the three countries must still approve the pact, officially known as the United States-Mexico-Canada Agreement (USMCA), before it goes into effect and replaces Nafta.
But the US trade landscape will shift significantly in January when Democrats take control of the US House of Representatives in January after winning midterm elections in November. Presumptive incoming Speaker of the House Nancy Pelosis described the deal as a “work in progress” that lacks worker and environment protections.
“This is not something where we have a piece of paper we can say yes or no to,” she said at a press conference on Friday, noting that Mexico had yet to pass a law on wages and working conditions.
Still, Trump and US Trade Representative Robert Lighthizer expressed confidence the agreement would pass Congress. “It’s been so well reviewed I don’t expect to have very much of a problem,” Trump said.
Lighthizer said the pact was negotiated from the beginning to be a bipartisan agreement. “I think we’ll get the support of a lot of Democrats,” he told reporters.
Trump had forced Canada and Mexico to renegotiate the 24-year-old agreement because he said the existing pact encouraged US companies to move jobs to low-wage Mexico.
US objections to Canada’s protected internal market for dairy products was a major challenge facing negotiators during the talks, and Trump repeatedly demanded concessions and accused Canada of hurting US farmers.
BDI, Germany’s main industry association, said in a statement the agreement’s rules on preferential origin for the automotive sector would be stricter and more complex, calling it“a retrograde step compared with Nafta.”