U.S., Mexico Reach Trade 'Understanding' That Could Lead To NAFTA Overhaul

U.S. and Mexico make NAFTA breakthrough, increasing chances of final deal

While Mexico's top negotiator, economy minister Ildefonso Guajardo reiterated Monday that the next step was for Canada to rejoin the discussions on the trilateral accord, Trump said, "We could have a separate deal or we could put it in the same deal". Under the new deal, 75% of an automobile's value must be manufactured in North America, up from NAFTA's current level of 62.5%. It's also a win for Mexico.

"NAFTA revocation would lower real incomes in the large majority of sectors in all three NAFTA countries, and that average wages would fall in almost all regions in North America", Auer wrote. "A lot of people thought we'd never get here because we all negotiate tough - we do, so does Mexico".

Without Canada, America's number two trading partner, it's unclear whether any new USA trade agreement with Mexico would be possible.

But he said Ottawa would "only sign a new NAFTA that is good for Canada and good for the middle class".

The BIS predicts that revoking NAFTA would also cause wages to fall in all Canadian provinces and Mexican states, and in all but one of the 435 congressional districts in the U.S.

He said it would be replaced in part by the newly named United States-Mexico Trade Agreement. This will be a major boon to American automotive workers and that industry's domestic supply chain. A draft fact sheet specified the content would be made in the United States and Mexico.

At the same time, President Donald Trump threatened to keep Canada, the third member of NAFTA, out of any new trade agreement.




On Monday, they have been proved wrong by an unmitigated victory for the USA. "It's also great trade, and it makes it a much more fair bill and we are very excited about it".

This victory will lead to others. But the countries still must resolve hard issues, including US complaints about Canada's protection for its dairy farmers and the way disputes are resolved under NAFTA.

Canada foreign minister Freeland expected to arrive for talks in Washington shortly - senior u.S. Her boss, Prime Minister Justin Trudeau, even though it was a good idea to antagonize Trump at his failed G7 summit in June. Another core dispute is over Chapter 19 dispute panels, considered a deal-breaker for Canada, but which the USA wants to eliminate.

On Monday morning, he tweeted that a deal would be coming today, and then later the administration set a time for that announcement. Today he again vowed to raise vehicle tariffs on Canada if it refuses to revise unfair levies of almost 300 percent on some American goods, among other unfair practices.

The U.S. agreed to keep the 2.5 per cent tariff now applied under World Trade Organization rules if the cars are made at factories that already exist, according to two people familiar with the plans, who asked not to be named discussing private negotiations.

Europe a year ago had a $151 billion surplus with the USA. Canada and the USA are both on the eve of contentious mid-term elections, which could affect the timeline of the negotiations.

US, Mexican and Canadian stocks opened higher on Monday on optimism about a trade deal.

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