In the News

Trump inks new Mexico, Canada trade deal

1/30/2020
Arkansas Democrat-Gazette

WASHINGTON -- President Donald Trump signed the revised North American Free Trade Agreement into law Wednesday, fulfilling a key campaign promise and closing more than two years of tumultuous negotiations over the continent's trade rules.

The trade deal, now called the United States-Mexico-Canada Agreement, updates the quarter-century-old NAFTA, with stronger protections for workers and the digital economy, expanded markets for American farmers and new rules to encourage auto manufacturing in North America.

"Today we are finally ending the NAFTA nightmare and signing into law the brand-new U.S.-Mexico-Canada Agreement," Trump said during a signing ceremony at the White House while declining to share the moment with key Democratic lawmakers whose support was essential to getting it over the finish line.

The event featured hundreds of business and farm leaders from around the country and scores of Republican officials. No Democratic members of Congress were on the White House guest list. It also gave the president a chance to at least briefly shift the focus in Washington, where Trump's impeachment trial has occupied center stage for weeks.

"For the first time in American history, we have replaced a disastrous trade deal that rewarded outsourcing with a truly fair and reciprocal trade deal that will keep jobs, wealth and growth right here in America," he said.

The deal will restore certainty about the direction of the North American economy for the multitude of companies that depend on the rules to carry out their businesses. While the Trump administration reached an agreement with Canada and Mexico more than a year ago, it came after months of tense negotiations that included a threat by the president to leave Canada out of the deal completely.

Mexico has ratified the deal, and Canada is expected to formally approve it soon.

U.S. Sen. John Boozman, R-Ark., attended Wednesday's signing ceremony, later releasing a written statement hailing the new agreement.

"With his signature, President Trump officially delivered on his campaign promise to modernize our trade agreement with Mexico and Canada. This historic deal brings our trade policies into the 21st century and enables hardworking Arkansas farmers, ranchers, manufacturers and workers to compete in the global economy," the lawmaker from Rogers said.

Other members of the delegation Wednesday also welcomed the development.

In an interview, U.S. Rep. French Hill, R-Ark., called the updated trade agreement "long overdue."

"I think it will be a positive for Arkansas, particularly for the 100,000 Arkansans that are employed [in jobs] directly connected with trade with Mexico and Canada," the lawmaker from Little Rock said. "Mexico and Canada are Arkansas' two most important trading partners, as they are for the entire country, so this is the most important trade agreement that we could tackle."

In a written statement U.S. Rep. Steve Womack, R-Ark., called the agreement "a win for Arkansas and America."

Trade experts say the impact of the new U.S.-Mexico-Canada Agreement will be modest. Canada and Mexico already represent the top two export markets for U.S. goods. The independent U.S. International Trade Commission last year calculated that the deal would add 0.35%, or $68 billion, to economic growth and generate 176,000 jobs over six years for the U.S., which has a $21 trillion economy with 152 million nonfarm jobs.

Through months of tough negotiations last year, Trump's trade advisers hammered out significant concessions that ultimately won over congressional Democrats, as well as the AFL-CIO.

The deal constitutes an important political victory for Trump and his second trade win of the month. The president signed an initial trade pact with China at the White House just two weeks ago.

The 26-year-old agreement, which was negotiated by the George H.W. Bush administration and signed into law by President Bill Clinton, has since become a political target, derided for encouraging American companies to move factories and jobs to Mexico.

The Trump administration began its renegotiation of NAFTA in August 2017 with harsh words for Canada and Mexico, with the president's top trade adviser saying that the pact had "fundamentally failed many, many Americans and needs major improvement."

The new agreement requires automakers to get 75% of their production content (up from 62.5% in NAFTA) from within North America to qualify for the pact's duty-free benefits. That means more auto content would have to come from North America, not imported more cheaply from China and elsewhere.

At least 40% of vehicles would also have to originate in places where workers earn at least $16 an hour. That would benefit the United States and Canada -- not Mexico, where auto assembly workers are paid a fraction of that amount.

The deal requires more protections for workers, blocking imports of goods made with forced labor and setting up mechanisms to ensure that those rules are enforced.

In response to the concerns of congressional Democrats, it sets up an independent panel that can investigate factories accused of violating labor rights and stop shipments of that factory's goods at the border. It establishes an interagency committee to monitor Mexico's labor changes, as well as American attaches who will report to Congress on the progress.

In a major concession to Democrats, the Trump administration agreed to pare back certain protections for an advanced and very expensive class of drugs called biologics. The final agreement removes a provision that had offered the drugs 10 years of protection from cheaper alternatives in Canada and Mexico.

The agreement expands other protections for intellectual property rights, for example, extending the 50 years of protection for copyrights in NAFTA to 70 years. It also includes new criminal penalties for theft of trade secrets, including cybertheft.

The agreement gives American farmers some additional access to foreign markets, particularly in Canada. It does not dismantle Canada's "supply management system," which dictates how much Canadian farmers should produce so they can be profitable. But Canada did agree to eliminate a program that helps sellers of certain milk products, at home and abroad, and open its market to U.S. milk, cream, butter, cheese and other products. In return, the United States expanded access to its market for Canadian dairy and sugar.

It also creates a list of cheese names that Mexico and the United States agree can be marketed without restriction in their respective countries, and it forces grocery stores in British Columbia to stop their practice of selling British Columbia-only wines on certain shelves and stock U.S. wines alongside them.

In a major change, the new agreement rolls back a special system of arbitration that allowed companies to sue governments for unfair treatment. The provision was criticized by the Trump administration, which said that it encouraged outsourcing, as well as by Democrats, who said it gave corporations too much power to challenge environmental and consumer regulations.

Critics include environmental groups concerned that the agreement does not address global warming. Some conservatives say the agreement will make cars and other products more expensive for consumers.

Information for this article was contributed by Frank E. Lockwood of the Arkansas Democrat-Gazette; by Ana Swanson, Emily Cochrane and Jim Tankersley of The New York Times; by Kevin Freking and Paul Wiseman of The Associated Press; and by Jeff Stein and Erica Werner of The Washington Post.