NATION/WORLD
Tuesday, August 28, 2018
East Oregonian
Page 7A
U.S. and Mexico tentatively set to replace NAFTA
By PAUL WISEMAN,
LUIS ALONSO LUGO
and ROB GILLIES
Associated Press
WASHINGTON
—
Snubbing Canada, the Trump
administration reached a pre-
liminary deal Monday with
Mexico to replace the North
American Free Trade Agree-
ment — a move that raised
legal questions and threat-
ened to disrupt the operations
of companies that do busi-
ness across the three-country
trade bloc.
President Donald Trump
suggested that he might
leave Canada, America’s
No. 2 trading partner, out of
a new agreement. He said he
wanted to call the revamped
trade pact “the United
States-Mexico Trade Agree-
ment” because, in his view,
NAFTA had earned a rep-
utation as being harmful to
American workers.
But first, he said, he would
give Canada a chance to get
back in — “if they’d like to
negotiate fairly.” To inten-
sify the pressure on Ottawa to
agree to his terms, the pres-
ident threatened to impose
new taxes on Canadian auto
imports.
Canada’s NAFTA negoti-
ator, Foreign Minister Chrys-
tia Freeland, is cutting short a
trip to Europe to fly to Wash-
ington on Tuesday to try to
restart talks.
“We will only sign a new
NAFTA that is good for Can-
ada and good for the middle
class,” said Adam Austen, a
spokesman for Freeland, add-
ing that “Canada’s signature
is required.”
“There is still a great deal
of uncertainty — trepidation,
nervousness — a feeling that
we are on the outside look-
ing in,” said Peter MacKay,
a former Canadian minister
of justice, defense and for-
eign affairs who is now a
partner at the law firm Baker
McKenzie.
Critics denounced the
prospect of cutting Canada
out of a North American trade
AP Photo/Evan Vucci
President Donald Trump talks on the phone with Mexican President Enrique Pena Ni-
eto, in the Oval Office of the White House, Monday in Washington. Trump is announc-
ing a trade “understanding” with Mexico that could lead to an overhaul of the North
American Free Trade Agreement. Trump made the announcement Monday in the Oval
Office, with Mexican President Enrique Pena Nieto joining by speakerphone.
AP Photo/Luis Alonso Lugo
United States Trade Representative Robert Lighthizer,
front left, and Mexican Secretary of Economy Idelfon-
so Guajardo, front right, walk to the White House on
Monday.
pact, in part because of the
risks it could pose for com-
panies involved in interna-
tional trade. Many manufac-
turers have built complex but
vital supply chains that cross
all three NAFTA borders.
Trump was quick to pro-
claim victory, though, point-
ing to Monday’s surge in
stock prices, which was
fueled in part by the apparent
breakthrough with Mexico.
“We just signed a trade
agreement with Mexico, and
it’s a terrific agreement for
everybody,” the president
said. “It’s an agreement that
a lot of people said couldn’t
be done.”
Trump has frequently
condemned the 24-year-
GoodHealth LIVE
old NAFTA trade pact as
a job-killing “disaster” for
American workers. NAFTA
reduced most trade barriers
between the three countries.
But the president and other
critics say it encouraged U.S.
manufacturers to move south
of the border to exploit low-
wage Mexican labor.
The preliminary deal
with Mexico might encour-
age more manufacturing in
the United States. Yet it is far
from final. Even after being
formally signed, it would
have be ratified by lawmak-
ers in each country.
The
U.S.
Congress
wouldn’t vote on it until next
year — after November mid-
term elections that could end
Republican control of the
House of Representatives.
“There are still a lot
of questions left to be
answered,” MacKay said.
He noted, for example, that
Trump said nothing Monday
about dropping U.S. tariffs on
Mexican or Canadian steel —
tariffs that were imposed, in
part, to pressure those coun-
tries to reach an agreement on
NAFTA.
But at least initially, it
looks like at least a tenta-
tive public-relations victory
for Trump, the week after
his former campaign man-
ager was convicted on finan-
cial crimes and his former
personal attorney implicated
him in hush money payments
to two women who say they
had affairs with Trump.
Before the administra-
tion began negotiating a new
NAFTA a year ago, it noti-
fied Congress that it was
beginning talks with Can-
ada and Mexico. So Mon-
day’s announcement raises
the question: Is it authorized
to reach a deal with only one
of those countries?
A senior administration
official, who briefed report-
ers on condition of anonym-
ity, said yes: The administra-
tion can tell Congress it had
reached a deal with Mexico
— and that Canada is wel-
come to join.
But other analysts said the
answer wasn’t clear: “It’s a
question that has never been
tested,” said Lori Wallach,
director of the left-leaning
Public Citizen’s Global Trade
Watch.
Even a key Trump ally,
Rep. Kevin Brady, the Texas
Republican who is chair-
man of the House Ways and
Means Committee, expressed
caution about Monday’s
apparent
breakthrough.
Brady said he looked for-
ward “to carefully analyzing
the details and consulting in
the weeks ahead to determine
whether the new proposal
meets the trade priorities set
out by Congress.”
And the No. 2 Senate
Republican, John Cornyn of
Texas, while hailing Mon-
day’s news as a “positive
step,” said Canada needs to
be party to a final deal.
“A trilateral agreement
is the best path forward,”
Cornyn said, adding that mil-
lions of jobs were at stake.
And there are political rea-
sons to keep Canada inside
the regional bloc:
“Mexico will have a dif-
ficult time selling ‘Trump’s
deal’ back home if Canada
does not think it is a good
deal,” said Daniel Ujczo, a
trade attorney with Dickinson
Wright PLLC. “It will appear
that Mexico caved.”
Indeed, Mexico has said it
wants Canada included in a
deal to replace NAFTA. But
Foreign Minister Luis Videg-
aray told reporters that “Mex-
ico will have a free trade
agreement regardless of the
outcome” of U.S.-Canada
negotiations.
The Office of the U.S.
Trade Representative said
Monday that Mexico had
agreed to ensure that 75 per-
cent of automotive content
be produced within the trade
bloc (up from a current 62.5
percent) to receive duty-free
benefits and that 40 percent
to 45 percent be made by
workers earning at least $16
an hour. Those changes are
meant to encourage more
auto production in the United
States.
For months, the talks were
held up by the Trump admin-
istration’s insistence on a
“sunset clause”: A renego-
tiated NAFTA would end
after five years unless all
three countries agreed to con-
tinue it. Mexico and Canada
considered that proposal a
deal-killer.
On Monday, the Trump
administration and Mexico
announced a compromise
on that divisive issue: An
overhauled NAFTA would
remain in force for 16 years.
After six years, the countries
would review the agreement
and decide whether it needed
to be updated or changed.
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