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U.S., Mexico reach NAFTA deal, turn up pressure on Canada


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U.S., Mexico reach NAFTA deal, turn up pressure on Canada

By Roberta Rampton and Jeff Mason

 

2018-08-27T171015Z_2_LYNXNPEE7Q11A_RTROPTP_4_TRADE-NAFTA-TRUMP.JPG

U.S. President Donald Trump speaks to Mexico's President Enrique Pena Nieto on the phone as he makes an announcemment on the status of the North American Free Trade Agreement (NAFTA) from the Oval Office of the White House in Washington, U.S., August 27, 2018. REUTERS/Kevin Lamarque

 

WASHINGTON (Reuters) - The United States and Mexico agreed on Monday to overhaul the North American Free Trade Agreement (NAFTA), putting pressure on Canada to agree to new terms on auto trade and dispute settlement rules to remain part of the three-nation pact.

 

Auto stocks soared and the S&P 500 and the Nasdaq rallied to record highs on the expectation that Canada would sign onto the deal and ease the economic uncertainty caused by U.S. President Donald Trump's repeated threats to ditch the 1994 accord.

 

Details of gains and concessions in the deal were only starting to emerge on Monday. Trump threatened he still could put tariffs on Canadian-made cars if Canada did not join its neighbors and warned he expected concessions on Canada's dairy protections.

 

"I think with Canada, frankly, the easiest we can do is to tariff their cars coming in. It's a tremendous amount of money and it's a very simple negotiation. It could end in one day and we take in a lot of money the following day," Trump said.

 

Negotiations among the three partners, whose mutual trade totals more than $1 trillion annually, have dragged on for more than a year, putting pressure on the Mexican peso <MXN=> and the Canadian dollar <CAD=>. Both currencies gained against the U.S. dollar after Monday's announcement.

 

The political stakes are high for all three countries. Trump and Republicans in the U.S. Congress up for re-election in November want to ensure farmers and other voters whose jobs depend on trade with Canada and Mexico that the deal is sealed.

 

Mexican President Enrique Pena Nieto wants to sign the agreement before leaving office at the end of November, and Canadian Prime Minister Justin Trudeau faces a national election expected by October 2019.

 

Canadian Foreign Minister Chrystia Freeland is expected to travel to Washington for talks on Tuesday. Her spokesman said Canada would sign only a new agreement that is good for the country.

 

Trump spoke with Trudeau on Monday, his economic adviser Larry Kudlow told reporters. The deal with Mexico should serve as a "reset" for talks with Canada, Kudlow said.

 

90-DAY WINDOW

Officials said they hope Canada will agree to the terms by Friday, when the White House plans to notify Congress formally that Trump will sign the deal in 90 days. Congress has to approve it.

 

"There are still issues with Canada but I think they could be resolved very quickly," a senior trade official told Reuters in an interview.

 

If talks with Canada are not wrapped up by the end of this week, Trump plans to notify Congress that he has reached a deal with Mexico, but would be open to Canada joining, U.S. Trade Representative Robert Lighthizer told reporters.

 

Some Republicans in the U.S. Congress called the deal a positive step but said Canada must be part of the new pact.

 

Trudeau spoke to Pena Nieto on Sunday and shared their commitment to reaching a successful conclusion of NAFTA "for all three parties," the prime minister's office said.

 

Mexican Foreign Minister Luis Videgaray told a news conference in Washington that if Canada and the United States do not reach an agreement on NAFTA, "we already know that there will still be a deal between Mexico and the United States."

 

NEW AUTO RULES

The Mexico-U.S. discussions focused on crafting new rules for the automotive industry, which Trump has put at the heart of his drive to rework a pact he has repeatedly described as a "disaster" for American workers.

 

Matt Blunt, president of the American Automotive Policy Council, which represents General Motors Co <GM.N>, Ford Motor Co <F.N> and Fiat Chrysler Automobiles NV <FCHA.MI>, said the group was optimistic about the new deal, though it was still reviewing the details.

 

The 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 U.S. trade official said. A fact sheet describing the bilateral agreement specified the content would be made in the United States and Mexico.

 

That requirement could shift some auto parts manufacturing to Mexico from China, a White House official told Reuters, speaking on condition of anonymity.

 

The Trump administration said the deal improves labor provisions, in part by requiring 40 percent to 45 percent of auto content to be made by workers earning at least $16 per hour.

 

That measure could move some production back to the United States from Mexico and should lift Mexican wages, the White House official said.

 

The United States relented on its demand for an automatic expiration for the deal, known as a "sunset clause."

 

Instead, the United States and Mexico agreed to a 16-year lifespan for the deal, with a review every six years that can extend the pact for 16 years, U.S. Trade Representative Lighthizer said.

 

Mexico agreed to eliminate dispute settlement panels for certain anti-dumping cases, a move that could complicate talks with Canada, which had insisted on the panels.

 

Monday's announcement lifted equity markets in all three countries, with shares in automotive companies standing out on relief that the deal appeared to end the uncertainty that has dogged the sector for months.

 

General Motors Co <GM.N>, Ford Motor Co <F.N>, and Fiat Chrysler Automobiles NV <FCAU.N> gained between 3.3 percent and 4.8 percent, while Canadian auto parts makers such as Magna International Inc <MG.TO> gained 4.6 percent.

 

(Reporting by Roberta Rampton and Jeff Mason; Additional reporting by Sharay Angulo, David Lawder, Dave Graham, Andrea Hopkins, David Shepardson; Editing by Paul Simao, Grant McCool and Dan Grebler)

 
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-- © Copyright Reuters 2018-08-28
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I predicted Trump would cave come Sept. Seems I gave him too much credit by a few days. Guy has zero backbone. This "deal" he is celebrating amounts to nothing. It won't regain a 100 American jobs. He couldn't take the heat that was dialing up before the mid-term elections. Canada should delay until àfter the Nov shift in the House. Car tariffs are illegal at this time and he does not have the authority from Congress to negotiate a bi-lateral deal with Mexico. Meanwhile Canada already belongs to TPP with the Mexicans. Sweat it out you orange moron.

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11 minutes ago, pmarlin said:

Read the details, Trump just got his wall paid for.

Deal is yet to be finalised, as per usual Trump hyperbole. However, if the deal with Mexico is ratified on current T&Cs, please explain your conclusion.

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On 8/28/2018 at 7:23 AM, pmarlin said:

Read the details, Trump just got his wall paid for.

Didn't know the deal was ratified yet. And even if it was, it doesn't seem like such a great deal.

 

"Auto makers also will have to ensure 40% to 45% of that vehicle’s content is produced by workers earning a wage of at least $16 an hour, a provision aimed at tilting more work toward the U.S. to generate manufacturing jobs...

"Kristin Dziczek, an industry expert at the Center for Automotive Research in Ann Arbor, Mich., said the bulk of vehicles sold in the U.S. by GM, Ford and Fiat Chrysler are made in North America.

There are just a handful of vehicles below that 40% or 45% threshold for wages that are imported to the U.S. from Mexico,” such as Honda HR-V and Nissan Sentra, she said."

https://www.wsj.com/articles/mexico-pact-eases-car-makers-concerns-1535415106?mod=article_inline

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Another demonstration of Trump's ignorance:

He called this prospective agreement "maybe the largest trade deal ever." The ridiculousness of this claim is self evident. Before there was a deal that included the US, Mexico, and Canada. So far it's just the US and Mexico. You have to seriously arithmetically disabled to make this claim. There's no "maybe" about it. This possible deal is currently smaller than the original one.

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1 minute ago, zaphod reborn said:

FAKE NEWS!  This is just a framework for an agreement and it still requires Senate approval.  There are no details and there is no deal.  Another Trump scheme to distract from his scandals.

I wonder who has a senate majority. Any ideas?

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3 hours ago, pegman said:

This "deal" he is celebrating amounts to nothing. It won't regain a 100 American jobs.

 

Since US unemployment is at the lowest ever already under Trumps presidency, I guess those 100 jobs would also not make the difference

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On 8/28/2018 at 9:55 AM, janclaes47 said:

I wonder who has a senate majority. Any ideas?

“Nafta is a trilateral agreement. It requires legislation and a change to Nafta requires legislation,” said Senator Patrick J. Toomey, Republican of Pennsylvania. “I’ve told them any change has to go through Congress. There is not necessarily complete agreement about that.”

Senator Lamar Alexander, Republican of Tennessee, said no one “is envisioning” a revised Nafta that does not include Canada.

https://www.nytimes.com/2018/08/27/us/politics/us-mexico-nafta-deal.html?action=click&amp;module=Top Stories&amp;pgtype=Homepage

 

They're not the only Republican Senators unhappy with the prospective deal as it now stands.

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"Mexican President Enrique Pena Nieto wants to sign the agreement before leaving office at the end of November"

 

I bet he does

 

The incoming Mexican president is not a fan of these current negotiations.

 

Maybe he'll do a trump and just walk away with nothing in place

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3 hours ago, pmarlin said:

Read the details, Trump just got his wall paid for.

 

Allen Weisselberg will be issuing the "invoice" right?

 

If you believe this can we get you to pay for a "bridge"?

 

 

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2 hours ago, janclaes47 said:

I wonder who has a senate majority. Any ideas?

First of all, as of now, nobody, because of McCain's death (it's 50-49, but you can hardly count on Jeff Flake to vote with Trump).  Even before it gets to the Senate approval, it's not a deal until Canada buys into the framework.

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2 hours ago, Bluespunk said:

The incoming Mexican president is not a fan of these current negotiations.

President elect Andres Manuel Lopez Obrador appears to favor current negotiations (July 2018):

  • "he respects the existing Mexican team renegotiating the trade pact."
  • “We are going to accompany the current government in this negotiation, we are going to be very respectful, and we are going to support the signing of the agreement,”

https://globalnews.ca/news/4308065/mexico-new-president-nafta/

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22 minutes ago, Srikcir said:

President elect Andres Manuel Lopez Obrador appears to favor current negotiations (July 2018):

  • "he respects the existing Mexican team renegotiating the trade pact."
  • “We are going to accompany the current government in this negotiation, we are going to be very respectful, and we are going to support the signing of the agreement,”

https://globalnews.ca/news/4308065/mexico-new-president-nafta/

"Negotiators want to strike a deal before the newly elected Mexican president, Andres Manuel Lopez Obrador, takes office in December. Mr Obrador has been reluctant to continue Mr Pena Nieto's opening up of Mexico's energy sector, which could complicate negotiations."

 

"We're very interested in it remaining a three-country deal," he told journalists on Monday. "The free-trade agreement should remain as it was originally conceived."

 

https://www.bbc.com/news/business-45323634

 

 

 

 

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Firstly, the Senate does not ratify treaties they either concur or not. If they concur with a two thirds majority of those Senators present the treaty then takes effect when "instruments of ratification" are exchanged between the USA and the Foreign government opposite.

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24 minutes ago, fotunate said:

Firstly, the Senate does not ratify treaties they either concur or not. If they concur with a two thirds majority of those Senators present the treaty then takes effect when "instruments of ratification" are exchanged between the USA and the Foreign government opposite.

A distinction without a difference.

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25 minutes ago, fotunate said:

Firstly, the Senate does not ratify treaties they either concur or not. If they concur with a two thirds majority of those Senators present the treaty then takes effect when "instruments of ratification" are exchanged between the USA and the Foreign government opposite.

Secondly, NAFTA was not a treaty. No reason to expect the any modified version of it will be either.

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Never commented on NAFTA, further the cheap vague attempt at dismissal "a distinction without a difference" is a shallow attempt of those who possess little or no technical expertise of issues discussed.Pontification comes to mind.

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8 hours ago, fotunate said:

Never commented on NAFTA, further the cheap vague attempt at dismissal "a distinction without a difference" is a shallow attempt of those who possess little or no technical expertise of issues discussed.Pontification comes to mind.

Then when why were you were posting that bit of information about treaties?

As for that bit about Pontification, you are a world-class ironist.

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Bloomberg Busines has a number of stories concluding the agreement is a joke. NAFTA gifted Mexico North America's auto manufacturing sector and this watered down nothing revision does not change that fact. Another phony hype show by Trump. 

https://www.bloomberg.com/view/articles/2018-08-27/trump-s-mexico-deal-reveals-another-deficit

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21 minutes ago, pegman said:

Bloomberg Busines has a number of stories concluding the agreement is a joke. NAFTA gifted Mexico North America's auto manufacturing sector and this watered down nothing revision does not change that fact. Another phony hype show by Trump. 

https://www.bloomberg.com/view/articles/2018-08-27/trump-s-mexico-deal-reveals-another-deficit

A similar perspective: Trump’s Trade Deal With Mexico Is Both Totally Fake and Extremely Important

http://nymag.com/daily/intelligencer/2018/08/trumps-trade-deal-with-mexico-is-both-fake-and-important.html

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Glad to see NAFTA go to hell ,Congress must act in the interest of the American people,not the the globalist scum,which cost close to a million or more American jobs and billions of dollars,when it was passed in 1994 up until 2014.

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On 8/27/2018 at 3:38 PM, webfact said:

"I think with Canada, frankly, the easiest we can do is to tariff their cars coming in. It's a tremendous amount of money and it's a very simple negotiation. It could end in one day and we take in a lot of money the following day," Trump said.

Exactly who does he think pays the tariffs? If they indeed "take in a lot of money the following day", where does he think it comes from?

 

 

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2 hours ago, riclag said:

Glad to see NAFTA go to hell ,Congress must act in the interest of the American people,not the the globalist scum,which cost close to a million or more American jobs and billions of dollars,when it was passed in 1994 up until 2014.

 

Remind me once again where IPhones are made and which US citizen owns that company. How much personal tax does the owner pay in the US and how much company tax?

 

Make the IPhone in the USA? That can be done but nobody will be able to afford one.

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