U.S. President Donald Trump, Mexican President Enrique Peña Nieto and Canadian Prime Minister Justin Trudeau this morning signed the new U.S. Mexico Canada Agreement — or USMCA — in Buenos Aires, using the G-20 Summit as frame to resolve a trade dispute between America and its two closest neighbors.
“It is probably the largest trade deal ever made", Trump said of the USMCA, adding that all three countries will benefit from the deal. “This has been a battle, and battles sometimes make great friendships.”
The USMCA (read the whole text here), which replaces the North American Free Trade Agreement (NAFTA), will require ratification by all three countries' legislatures in order to take effect.
In the U.S., at least one prominent politician, Sen. Elizabeth Warren (D-Mass.), who is considered a possible Democratic contender for the 2020 White House race, has expressed her rejection of the treaty.
“Trump's deal won't stop the serious and ongoing harm NAFTA causes for American workers. It won't stop outsourcing, it won't raise wages, and it won't create jobs. It's NAFTA 2.0.,” Warren said in a statement issued a day before of the signing ceremony.
The USMCA will implement four measures affecting automakers:
The new agreement gradually raises the bar from 62.5% to 75% the minimum content of North American-made parts in cars required to be traded duty free.
It also mandates that automakers manufacture 40% of their motor vehicles in facilities where assembly workers are earning at least US$16 an hour.
Mexican government authorities are required to allow workers to form collective bargaining units, supporting a more union-friendly regulatory environment.
The deal includes side letters from the U.S. to the Mexican and Canadian governments promising exemptions from potential future tariffs imposed by the U.S. on some motor vehicles and auto parts, specifically 2.6 million Mexican-made passenger vehicles, all Mexican light trucks, and US$108 billion and US$32.4 billion worth of auto parts from Mexico and Canada, respectively.