National Security

Trump Touts New Trade Deal with Canada and Mexico

Chief executive expects all three countries to approve the agreement within the next 60 days

Image Credit: Shutterstock

President Donald Trump touted the benefits of a recently introduced trade deal  intended to replace the current framework the United States has with Canada and Mexico.

“Once approved by Congress, this new deal will be the most modern, up to date and balanced trade agreement in the history of our country, with the most advanced protections for workers ever developed,” Trump said on Monday during a White House news conference.

“Likewise, it will be the most advanced trade deal in the world, with ambitious provisions, on the digital economy, patents, financial services and other areas where the United States has a strong competitive advantage,” he said.

The United States-Mexico-Canada Agreement (USMCA) is the result of tough negotiations among the three countries, which started in August 2017. The proposed trade deal creates a standard legal framework, strengthens trade relationships, adds provisions to ensure small businesses benefit, and fosters worker and labor rights, the environment and standard regulatory practices. The new bargain will replace the North American Free Trade Agreement (NAFTA) adopted in 1994.

Related: Trump Reaches New Trade Deal to Replace NAFTA

“Canada and Mexico have agreed to new strong labor protections, environmental protections, and new protections for intellectual property,” Trump said. “So important. This new deal is an especially great victory for our framers. Our farmers have gone through a lot over the last 15 years. They’ve been taken advantage of by everybody.”

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Trump made trade a focus of his administration with his promise to rework or eliminate existing agreements. NAFTA became a main focus of his scorn as he argued that current agreements have hurt domestic workers by making it easier to outsource jobs. He argued that over the past five years the country has lost an average of $800 billion a year because of NAFTA.

“This is also a historic win for American manufacturers and autoworkers who have been treated so badly,” Trump said. “We lost so many jobs over the years under NAFTA. Under the current new deal, and if you look at the current NAFTA deal, the new deal is taking care of all these problems because, under NAFTA, foreign companies have been allowed to manufacture many of their parts overseas, ship them to Mexico or Canada for assembly, and send their foreign-made cars into the United States with no tax.”

America and Mexico appeared close to reaching a trade deal without Canada when they reached a preliminary agreement in principle August 31. Canadian Prime Minister Justin Trudeau and Canadian Foreign Affairs Minister Chrystia Freeland have been resistant to many of the demands put forth by the president.

Trump mentioned the contentious relationship with Canada but added that it turned out to be a very good trade deal for both countries. He also complimented the hard work he said Mexican President Enrique Peña Nieto and his team put into reaching a deal, noting that president-elect Andrés Manuel López Obrador is on board as well.

Related: Trump to Sign New Trade Deal with Mexico in 90 Days

The proposed trade deal promises to help boost manufacturing by establishing more specific rules of origin provisions. Rules of origin are used to determine in which country a product originated.

The update is intended to provide greater incentives to source goods and materials in North America. It also includes provisions to protect automakers, such as requiring that at least 75 percent of cars must be produced in North America to benefit under the deal.

NAFTA helped boost trade relations among the partner countries by eliminating or reducing tariffs. The USMCA promises to go a step further by addressing nontariff barriers as part of a new commitment to increase market access. The nontariff barriers are specifically related to trade in remanufactured goods, import licensing, and export licensing.

Trump expects for all three partner countries to sign the agreement within the next 60 days. But afterward, the legislatures in each country must approve the finalized agreement before it can be implemented.

U.S. Trade Representative Robert Lighthizer said August 28 that a replacement trade deal will likely not come up for a vote in Congress before February 2019.

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