Mexico, US reach preliminary trade deal clearing path for Canada to rejoin NAFTA talks

27 August, 2018

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Mexico and the United States have a preliminary agreement on key trade issues in order to complete the renegotiation of the North American Free Trade Agreement (NAFTA). This achievement will allow Canada to rejoin the trilateral treaty negotiations.

Although the details are still unknown, several U.S. media outlets have reported that the two countries have agreed that 75% of a product must be made in North America to receive tax-free treatment, up from 62.5% under the existing deal.

On cars, the two sides are also said to have settled on rules that will require a portion of each vehicle to be made at high-wage factories, a provision aimed at discouraging firms from locating plants in lower-wage Mexico.

Minutes after negotiations between the two countries concluded, the Mexican delegation, led by Economy Secretary Ildefonso Guajardo and US trade representative Robert Lighthizer, moved from the office of that official to the White House so that President Donald Trump could make the agreement official.

Once in the oval office, Trump took the opportunity to put pressure on Canada to give up its differences with the U.S., to the extent that he threatened to end NAFTA and impose higher tariffs on its northern neighbor. “I'll be terminating the existing deal and going into this deal,” the president said during the conference, which was also attended by Mexican Chancellor Luis Videgaray and Jesus Seade Kuri, the designated negotiator by Mexico's president-elect Andres Manuel Lopez Obrador.

Trump also said he wanted to get rid of the name “NAFTA” because it has bad connotations. He said he planned to call the deal the “United States-Mexico Trade Agreement” instead.

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