The United States and Mexico agreed on Monday to a sweeping trade deal that pressures Canada to accept new terms on autos trade, dispute settlement and agriculture to keep the trilateral North American Free Trade Agreement (NAFTA).
U.S. Trade Representative Robert Lighthizer said the White House was ready to notify the U.S. Congress by Friday of President Donald Trump’s intent to sign the bilateral document, but that it was open to Canada joining the pact. Here are some of the main issues at the heart of the negotiations:
- The new deal requires 75% of the value of a vehicle to be produced in the United States or Mexico, up from the NAFTA threshold of 62.5%. The higher threshold is aimed at keeping more parts from Asia out, boosting North American automotive manufacturing and jobs.
- The United States and Mexico agreed to a 16-year lifespan for NAFTA, with a review every six years that can extend the pact for 16 years more, providing more business certainty.
- Mexico agreed to eliminate a settlement system for anti-dumping disputes, NAFTA’s Chapter 19. The move, sought by the United States, puts Canada in a difficult position because Prime Minister Justin Trudeau had insisted on maintaining Chapter 19 as a way to fight U.S. duties on softwood lumber, paper and other products that it views as unfair.
- The new deal will keep tariffs on agricultural products traded between the United States and Mexico at zero and seeks to support biotech and other innovations in agriculture. It lacks a previous U.S. demand to erect trade barriers to protect seasonal U.S. fruit and vegetable growers from Mexican competition.
- It contains enforceable labor provisions that require Mexico to adhere to International Labor Organization labor rights standards in an effort to drive Mexican wages higher.