Updates to our Terms of Use

We are updating our Terms of Use. Please carefully review the updated Terms before proceeding to our website.

Friday, March 29, 2024 | Back issues
Courthouse News Service Courthouse News Service

White House Announces Trade ‘Understanding’ With Mexico

President Donald Trump on Monday announced a breakthrough in trade between the U.S. and Mexico, a step that clears the way for Canada to rejoin negotiations to revise the North American Free Trade Agreement.

(CN) -  President Donald Trump on Monday announced a breakthrough in trade between the U.S. and Mexico, a step that clears the way for Canada to rejoin negotiations to revise the North American Free Trade Agreement.

"It's a big day for trade. It's a big day for our country," Trump told reporters in brief remarks from the Oval Office.

Although the initial announcement was short on details, the president characterized the agreement with Mexico as an "understanding."

He also said he did not want to use the name "NAFTA" for any final agreement before the countries as he believes it has a bad connotation.

“We’re going to call it the United States Mexico Trade Agreement,” Trump said during a call with Mexican president Enrique Pena Nieto Monday. “The U.S. was hurt badly for many years by NAFTA. Now it’s a deal for both countries.”

The new agreement reportedly mandates that 75 percent of auto manufacturing occur in the United States and Mexico. The move marks a more than 10 point increase from the previous agreement’s requirement which mandated 62.5 percent, according to Reuters.

The new deal will also be a boon for some workers. The new agreement also mandates that at least 45 percent of all auto manufacturing be done by laborers who earn at least $16 per hour.

Trump made the announcement from the Oval Office, with Nieto’s side of the call aired on speakerphone.

“The purpose of this call is to celebrate the understanding we have had between both negotiating teams on NAFTA: to review it, to modernize it, to update it, and to generate a framework that will improve productivity in North America,” Nieto said. “It is our wish Mr. President that Canada will also be able to be incorporated in all this.”

After the call, Trump said the U.S. is already “starting negotiations” with Canada “pretty much immediately.”

Trump said he will terminate the existing NAFTA deal as the U.S. transitions into the new agreement.

A letter initiating the new deal be submitted to Congress by Friday and the White House says it plans on seeing it signed within 90 days.

“This will be great for trade, makes it much more fair and we are very excited about it,” Trump said to Nieto by phone. “We have worked long and hard. [Mexico’s representatives] have been terrific. Mine have been fantastic too. They worked late into the night for months. It’s an extremely complex bill and something that will be talked about for many years to come.”

The revamped deal marks a victory for the administration which has long said it wanted to overhaul the 24 year old agreement.

Where Canada will factor in will be revealed “shortly,” Trump said.

“I’d like to negotiate fairly. We would like to do that. They have tariffs of almost 300 percent on our dairy products. The easiest thing we can do with Canada is tariff their cars coming in. It’s a very simple negotiation. It could end in one day,” Trump said. “We’ll give them a chance to have a separate deal or we could put it into this deal.”

The newly-named U.S.-Mexico Trade Agreement would also “make farmers so happy,” Trump said.

“Mexico promised to immediately start purchasing as much farm product as they can. They’re going to work very hard,” Trump said.

The president also mentioned U.S.-China trade relations Monday but backed off the topic saying China “wants to talk” but that it “just isn’t the right time.”

“That relationship has been too one sided for too many years, for too many decades. In the meantime, we’re doing very well with China. Our economy is up, it’s never been this good before. I think it’s only going to get better,” Trump said.

On a call with reporters Monday afternoon U.S. Trade Representative Robert Lighthizer echoed the president’s sentiments saying that “NAFTA 1.0” had “gotten seriously out of wack” and led to large trade deficits for the U.S.

“It needed updating and modernizing, consistent with the way the economy works now,” Lighthizer said. “We had an enormous amount of hurdles to overcome to negotiate an agreement that had $1.1 trillion dollars of trade at stake.”

Negotiations to reach the revamped deal took exactly a year and were spread out over seven rounds. At times, nearly 1,000 people representing the U.S., Mexico and Canada were present during negotiations, Lighthizer said.

Though Canada’s future role in the deal is uncertain, senior White House adviser Jared Kushner said talks may begin as soon as Monday afternoon.

“I also want to point out, this deal was done in record time, we did it very quickly and a big part of why we could do that was because of the great cooperation with the Mexican government. [Talks] were very focused on the future and we were willing to address problems each side had,” Kushner said.

The joint objective, according to Kushner, was to “make America better off and make Mexico better off.”

“We presented a deal with [President Trump’s] leadership that we thought was fair,” Kushner added.

If Canada should eventually agree to enter the agreement, Kushner said the White House was uncertain if another name change would be in order.

“We’ll work with Canada, but we’re focused more on substantive issues,” he said.

While specific details of the new deal were limited, its sunset provisions were discussed Monday.

According to Lighthizer, the U.S.-Mexico Trade Agreement will expire every 16 years, with an option to review terms of the pact every six years.

As for bipartisan support of the deal in Congress, Lighthizer said he was optimistic.

“It’s a stronger deal and has more enforceable revisions than any previous agreement. By a mile,” he said. “We’re very excited about it.”

Lighthizer also dismissed the notion that the White House’s decision to move on the deal without Canada was designed to put pressure on Canadian Prime Minister Justin Trudeau.

“This wasn’t designed to put pressure on anyone or anything like that. We had negotiations that went in for close to a year and in the last few weeks, we decided it was better to get a deal with one party and then, later, hopefully the other. It’s hard to have three people have the light bulbs go off at the same time,” he said.

Trudeau has been a part of the conversation since the beginning, said Deputy U.S. Trade Representative C.J. Mahoney.

Categories / Business, Consumers, Economy, Government, International, Politics

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Loading...