U.S., Canada, Mexico poised to sign trade deal

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President Trump, Canadian Prime Minister Justin Trudeau, judge, and departing Mexican president Enrique Pena Nieto signed a deal for the deal on Friday morning in Buenos Aires. Photo credit: REUTERS

UPDATED: 30/11/18 09:05 ET – deal signed, photo is added

BUENOS AIRES – The US, Canada and Mexico signed a new trade agreement that was defended by President Donald Trump to replace the quarter-century NAFTA pact, to conclude a year of intense negotiations and to provide a glimpse of security in the midst of increasing global tensions about trade.

Trump, Canadian Prime Minister Justin Trudeau and outgoing Mexican president Enrique Pena Nieto signed an authorization for the deal on the fringes of the Group's top of 20 in Buenos Aires. The majority of the pact still has to be ratified by legislators in the three countries, but the signature includes a handful of direct protections, such as car tariffs.

The deal now agrees with the ratification, almost certainly by the next US Congress, where Democrats will have a majority in Parliament from January. Uncertainties remain, as the 1994 original pact is still in force and steel and aluminum tariffs are still a major irritation. Nevertheless, the signing ended a difficult process characterized by repeated threats from Trump to leave the free trade zone of the continent.

"This has been a fight," Trump said in his remarks just before the leaders put pen on paper. "This is a model agreement that changes the trading landscape forever."

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The new deal is known as the agreement between the US and Mexico-Canada, although the Canadians have not mentioned this. The US and Mexico signed a deal in August, followed by Canada on 30 September.

The car industry has followed the negotiations closely.

Joe Hinrichs, Ford Motor Co.'s President Motor Operations, said in a statement: "Today's signing is an important step towards achieving free and fair trade in North America, and we look forward to being a collaborative partner. to support the ratification of the agreement across all three markets as it will support an integrated, globally competitive automotive industry that will help generate volume and support production jobs. "

The three countries sealed the new trade agreement one day before Trump met Chinese President Xi Jinping to discuss a possible truce in their trade war. The American leader has fired a global confrontation with trade by threatening a wide range of tariffs to force changes in commercial practices that he considers unfair to American industry. No one has been spared in that trade war – not even Canada and Mexico, the two largest buyers of American goods.

The signing took place on the last day in Pena Nieto & # 39; s office, a target that the countries had urged in an attempt to seal it before his successor, Andrés Manuel Lopez Obrador, comes to power on Saturday.

Difficult process

Trump often acknowledged the difficult path during the negotiations and praised the outcome. "We used a lot of barbs and some abuse and we've come and it's great for all our countries," he said.

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Trudeau said the deal eliminates the uncertainty about the region: "The new North American Free Trade Agreement maintains stability for the entire economy of Canada."

There are already calls for changes from the US Congress, while the Morena party of Lopez Obrador, which has a majority in the Mexican Senate, may also want revisions. Trudeau has a majority in the House of Commons of Canada, but stands for an election in October.

Trump expressed optimism about getting the deal blessed by American lawmakers. "I am looking forward to working with members of Congress," he said. "It is judged so well that I do not expect to have a big problem."

The original North American free trade agreement with three countries entered into force in 1994, but Trump has denounced it as a terrible deal that has led to job losses in US industry. The three countries trade more than $ 1 trillion of goods annually.

Pena Nieto said the new deal will provide a more "modern framework" for future exchanges between countries.

With the signing, "the whole region will be a good basis to invest in the automotive industry," said Jesus Seade, NAFTA's negotiator for Lopez Obrador, in an interview with Bloomberg Television on Thursday evening. "The car industry is the most important part of the deal, it is where most of the trade takes place and more will have to be invested by Toyota, Honda, Mercedes and the Germans and Koreans. the countries are going. "

Rates in place

Steel and aluminum tariffs, once seen as a pressure tactic in trade negotiations, remain in place. The US continues to insist on a quota in exchange for raising tariffs on Canada and Mexico, which have applied their own retaliation levies.

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"In order to achieve the full potential of the trade agreement and ensure ratification, the abolition of tariffs on steel and aluminum will be crucial and we will continue to work with all stakeholders on this important issue," Hinrichs said in his statement.

Canada has said that it will lift its rates once the US raises its own rates. The unresolved tariff battle will take the support of the private sector for the deal with the USMCA, said Rufus Yerxa, chairman of the National Council for Foreign Trade in the US.

The parts of the deal that start immediately after signing are 13 provisions known as "side letters." The most important are exclusions from American car rates to a certain quota that is far above the current Canadian and Mexican car production.

The side letters also contain agreements between the United States and Mexico on biological medicines, cheese names and car safety standards; and deals between the US and Canada on wine, water and energy.