Nafta Agreement Missigned

„The USMCA is 95 per cent of the existing NAFTA agreement,“ said Jacob Kirkegaard, senior Fellow at the Peterson Institute for International Economics. „There are provisions that cover things like e-commerce and digital services, but in manufacturing, for example, there is very little change.“ The new agreement provides that 40% of cars are eventually manufactured in countries that pay at least $16 an hour to auto workers – i.e. in the United States and Canada, not Mexico – for duty-free treatment under the trade pact. In addition, Mexico must implement labour law reforms to promote independent trade unions. At the solemn signing ceremony, Mr. Trump appeared at the G20 summit in Buenos Aires with Trudeau and outgoing Mexican President Enrique Pea Nieto. The legislative branch of each country must also approve the agreement. The agreement will restore security to the direction of the North American economy for the multitude of companies that depend on the rules to carry out their business. While the Trump administration reached an agreement with Canada and Mexico more than a year ago, after months of tense negotiations, the president threatened to pull Canada out of the agreement.

The president wasted little time in announcing the new North American trade agreement, calling it a „colossal victory“ for farmers and workers at the plant and „the largest, fairest, fairest, most balanced and most modern trade agreement ever achieved.“ The 26-year agreement, negotiated by the George Bush administration and signed by President Bill Clinton, has become a political goal that has been ridiculed for encouraging U.S. companies to relocate factories and jobs to Mexico. Legislative approval is the next step in this process, but it could prove a difficult task in the United States, especially now that Democrats – instead of Trump`s Republicans – will control the House of Representatives in January. Democrats and their allies in the labor movement are already calling for changes to the agreement. But while Trump hailed the new agreement as a radical overhaul of the „worst trade deal of all time,“ Canadian Prime Minister Justin Trudeau called the agreement „a new North American free trade agreement.“ Indeed, last Friday, the three heads of state and government did not sign the USMCA agreement itself, but a directive for their respective officials to sign legal documents. (The agreement must also be approved by Congress) As Trump can claim loans for an economic recovery provided by the USMCA, economists have said it is more of a White House function to keep most of the existing agreement in place, after first threatening to withdraw from NAFTA without being replaced. „With these trade agreements, we are better off than without them because we have put an end to costly uncertainties. But we are worse off on trade policy than we were three years ago,“ he said. I would rather imagine it with regard to what would have happened if this agreement had not come back.

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