What’s in Trump’s proposed trade deal with Mexico?

What’s in Trump’s proposed trade deal with Mexico?

What’s in Trump’s proposed trade deal with Mexico?

US President Donald Trump has announced a new trade "understanding" with Mexico that could overhaul the existing North American Free Trade Agreement (NAFTA), putting pressure on Canada to agree to the new terms on auto trade and other issues to remain part of the three-country pact.

U.S. stock indexes hit fresh records Monday as the U.S. and Mexico struck a tentative a bilateral trade deal that's expected to replace the 24-year old North American Free Trade Agreement. Canada and Mexico pushed back at that, saying it would cause uncertainty, as investors would be unlikely to spend money to expand plants if they anxious the deal could be torn up at any moment, robbing them of access to the US market.

The breakthrough increases pressure on Canada, which has been on the sidelines, to rejoin negotiations with the us and Mexico.

Shortly after the Prime Minister's Office released its statement, Conservative Foreign Affairs critic Erin O'Toole, released a note claiming that the Trudeau government has "failed to advance Canada's trade interests". It would also require 40% to 45% of the auto to be made by workers earning at least $16 an hour. "It's a big day for our country", said Mr. Trump, speaking in the Oval Office. That plan was vehemently opposed by Mexico, Canada and the auto industry.

Investors were also cheered by Washington's efforts to press the European Union to speed up trade negotiations.

Some Republicans in the US Congress called the deal a positive step but said Canada must be part of the new pact to avoid hurting US jobs.

Republicans in Congress, who are typically supporters of free trade, have pressed the White House to strike a deal, arguing that the relationship has benefited U.S. farmers and other groups.

"Kansas is heavily dependent on the agricultural and manufacturing industries, and it is a huge relief to our state to know that we can continue trading tariff-free with the new agreement", Colyer said.

However, his transition team has been taking part in the talks, and gave their blessing to the two-way deal.

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Under the U.S. Trade Promotion Authority law, known as TPA or "fast track", Mr. Trump must wait 90 days to sign an agreement after notifying Congress of his intention to do so.

It contains enforceable labor provisions that require Mexico to adhere to International Labor Organization labor rights standards in an effort to drive Mexican wages higher. He also suggested he might drop the name NAFTA altogether, offering instead a new title that conspicuously removes Canada from the picture: the "United States Mexico Trade Agreement".

"We are very interested in this being an agreement of three countries", said President-elect Andres Manuel Lopez Obrador.

"The Americans are clearly trying to spin this as a deal they've reached with Mexico, and Canada can take it or leave it", said Avery Shenfeld, chief economist with CIBC Capital Markets. While the country posted its best month of worldwide trade ever in June - with a record level of exports headed south of the border - a significant hit to the trade file could jeopardize that performance, Shenfeld cautioned.

He added that he hoped Canada would be able to soon join the agreement. Mexico has said they are going to start purchasing as much farm product as they can.

"This wasn't created to put pressure on anybody", a senior administration official said, before later adding that the United States planned to submit its NAFTA renegotiation plans to Congress by the end of the week with or without Canada's agreement.

A sunset clause could see NAFTA expire in 16 years, a considerable softening of the original USA proposal calling for a five-year clause.

Under the president's trade promotion authority, the White House notified Congress a year ago that it was renegotiating NAFTA, not seeking a new bilateral pact with Mexico.

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