Trump Signs NAFTA Replacement with Mexican and Canadian Leaders

United States-Mexico-Canada Agreement promises a standard legal framework, better trade relationships and more

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President Donald Trump took a huge step in meeting a campaign promise on Friday by signing a trade agreement with Mexico and Canada while in Buenos Aires, Argentina, for the G20 summit.

The North American Free Trade Agreement (NAFTA) has been the foundation of trade relations among the three countries since 1994.

But the president has been critical of the deal and vowed to replace it. He took a step in that direction by signing a replacement deal with Canadian Prime Minister Justin Trudeau (shown above left) and Mexican President Enrique Peña Nieto (above right).

The United States-Mexico-Canada Agreement (USMCA) was proposed by the three countries after a long and hard-fought negotiation process as a replacement deal on September 30.

The partner countries worked out the finer details before signing the deal Friday in Buenos Aires.

Related: Trump Reaches New Trade Deal to Replace NAFTA

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“The USMCA is the largest, most significant, modern and balanced trade agreement in history,” Trump said during the signing ceremony.

“All of our countries will benefit greatly. It is probably the largest trade deal ever made, also. In the United States that new trade pact will support high-paying manufacturing jobs and promote greater access for American exports across a range of sectors.”

The U.S. Congress and the legislative bodies of both partner countries will have to pass the trade agreement before it can become official. That poses some problems, as congressional control will split when the new session starts on Jan. 3, 2019.

Democrats were able to gain control of the House in the midterm elections this fall, while Republicans held onto the majority in the Senate.

“In the United States [this] new trade pact will support high-paying manufacturing jobs and promote greater access for American exports across a range of sectors.”

NAFTA helped boost trade relations among the partner countries by eliminating or reducing tariffs. Trump has repeatedly countered that the trade agreement has also hurt domestic workers by making it easier to outsource jobs.

The new deal is aimed at limiting the harm workers might face while still allowing for greater trade access.

U.S. Trade Representative Robert Lighthizer highlighted the numerous goals the administration hoped to accomplish on September 30. The deal is intended to create a standard legal framework, strengthen trade relationships, ensure small businesses benefit, and foster worker rights.

Related: Trump Touts New Trade Deal with Canada and Mexico

The USMCA counters outsourcing by ensuring labor and wage standards in certain industries. It also includes other more progressive ideas, such as environmental protections. It also limits tariffs as its predecessor did, while promising to go a step further by addressing non-tariff barriers. The non-tariff barriers are specifically related to trade in remanufactured goods, import licensing and export licensing.

The USMCA also has provisions specific to certain industries, such as farming and textiles. The deal promises to boost manufacturing by establishing more specific rules of origin provisions.

Rules of origin are used to determine the country in which a product originated. The update is intended to provide greater incentives to source goods and materials in North America.

America and Mexico looked close to leaving Canada out of the replacement trade deal when they reached a preliminary agreement in principle on August 31.

Canada has been resistant to many of the demands put forth by the president. White House Council of Economic Advisers Chairman Kevin Hassett urged the country at the time to consider joining.

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