U.S. AND MEXICO REACH PRELIMINARY AGREEMENT ON AUTO TRADE

Deal doesn't include Canada or address other NAFTA issues

Monday, August 27, 2018

U.S. and Mexico reach preliminary agreement on auto trade; deal doesn’t include Canada or address other NAFTA issues

President Trump with Mexico’s trade negotiators on Monday. (Doug Mills/The New York Times)

The United States and Mexico have reached a preliminary trade deal on automobiles that will revise key parts of the North American Free Trade Agreement and, for now, excludes Canada. President Trump said today that the deal is called the United States-Mexico Trade Agreement and said he wanted to get rid of the term NAFTA, which he said has a “bad connotation” for the U.S., Ana Swanson and Katie Rogers report for The New York Times.

“The U.S.-Mexico deal would require 75 percent of auto content to be made in the NAFTA region, up from the current level of 62.5 percent, a second U.S. official said. A draft fact sheet specified the content would be made in the United States and Mexico,” Roberta Rampton and Jeff Mason reportfor Reuters.”The deal also would require 40 percent to 45 percent of auto content to be made by workers earning at least $16 per hour, the second official said.”

An employee installs the rear passenger door on a test frame for a Volkswagen AG Tiguan compact sport utility vehicle (SUV) inside the company’s new production plant in Puebla, Mexico (Photographer: Susana Gonzalez/Bloomberg)

Outgoing Mexican President Enrique Peña Nieto said in a series of tweets that he has spoken to Canadian Prime Minister Justin Trudeau and is working toward a trilateral agreement with the U.S. and Canada by the end of the week, a previously set deadline. President Trump appeared ambivalent about the prospect; he said he would call Trudeau ‘very soon’ but then complained about Canadian tariffs on American dairy products and threatened to retaliate with tariffs to Canadian car imports.

“While Canada has not been a party to recent discussions, the potential for a two-country deal appears highly unlikely, given opposition by Mexico, American lawmakers and North American industries whose supply chains rely on all three countries,” Swanson and Rogers report. “Instead, Mr. Trump’s threats against Canada could prove to be a negotiating tactic. Both Mexican and American officials have said they hope their progress encourages Canada to come back to the negotiations quickly.”

The Washington Post reports, “Even if a deal does ultimately make its way to Capitol Hill, Congress is certain to struggle to pass it given divisions over trade in both parties. The difficulties would only increase if the pact is not finalized before the November midterm elections and Democrats retake control of the House. If Canada doesn’t sign off, it is unclear what Trump might do, as he has threatened to try to cancel the entire trade pact.”