NAFTA revisions go smoothly with Mexican representatives

August 27, 2018 – NY Times

President Trump said on Monday that the United States and Mexico had reached an accord to revise key portions of the North American Free Trade Agreement and would finalize it within days, suggesting he was ready to jettison Canada from the trilateral trade pact if the country did not get on board quickly.

Speaking from the Oval Office, Mr. Trump promoted the preliminary agreement with Mexico as a deal that could replace Nafta and threatened to hit Canada with auto tariffs if it did not “negotiate fairly.”

“They used to call it Nafta,” Mr. Trump said. “We’re going to call it the United States-Mexico Trade Agreement,” adding that the term Nafta — which he has called the “worst” trade deal in history — had “a bad connotation” for the United States.

Yet while Mr. Trump may try to change the name, the agreement reached with Mexico is simply a revised Nafta, with updates to provisions surrounding the digital economy, automobiles, agriculture and labor unions. The core of the trade pact — which allows American companies to operate in Mexico and Canada without tariffs — remains intact.

Now, the question becomes whether a trilateral pact becomes a bilateral deal — or Mr. Trump’s threats pressure Canada to return to the negotiating table and accede to many of the United States’ demands.

The president’s apparent willingness to move on without Canada prompted confusion and concern among lawmakers — who said it may not be legally permissible, let alone smart — and businesses whose supply chains depend on a deal encompassing all three countries.

“Because of the massive amount of movement of goods between the three countries and the integration of operations which make manufacturing in our country more competitive, it is imperative that a trilateral agreement be inked,” Jay Timmons, the president and chief executive of the National Association of Manufacturers, said in a statement.

Mexican officials said on Monday that they wanted to have Canada back in the process and were working toward a trilateral deal by the end of the week. President Enrique Peña Nieto of Mexico, who joined the White House announcement via phone, said, “It is our wish, Mr. President, that now Canada will also be able to be incorporated in all this.”

But later in the day, Luis Videgaray Caso, Mexico’s foreign minister, signaled that Mexico might be willing to move forward without Canada.

“There are things that we don’t control, particularly the political relationship between Canada and the U.S., and we definitely don’t want to expose Mexico to the uncertainty of not having a deal,” Mr. Videgaray said in an interview. “Not having a trade agreement with the U.S., that’s a substantial risk to the Mexican economy. Literally millions of jobs in Mexico depend on access to the U.S. market.”

Both the Mexicans and the Americans have been eager to reach a fully revised deal by the end of August, a date that would give the Trump administration enough time to notify Congress that a deal had been finalized and still have that deal be signed by the outgoing Mexican administration of Mr. Peña Nieto.

“Ideally we’ll have the Canadians involved,” said Robert Lighthizer, the United States trade representative, adding that the administration planned to officially inform Congress by Friday of its intent to sign a new deal, a step required before Congress votes on a trade pact. “If we don’t have Canada involved, we will notify that we have a bilateral agreement that Canada is welcome to join.”

Chrystia Freeland, the Canadian foreign minister, will travel to Washington on Tuesday to continue negotiations, said her spokesman, Adam Austen, on Monday.

“We will only sign a new Nafta that is good for Canada and good for the middle class,” Mr. Austen added. “Canada’s signature is required.”