Economy

Mexico deal muddies waters for Canada in continental trade talks

Mexico deal muddies waters for Canada in continental trade talks

The United States and Mexico have reached a trade agreement, leaving Canada as the odd man out in efforts to revise or replace the North America Free Trade Agreement (NAFTA), according to U.S. President Donald Trump.

US and Mexican officials are reportedly hoping that the progress they've made will entice Canada, America's No. 2 trade partner, to rejoin the talks, Burrell reported.

"A lot of this is optics versus procedure - this administration could probably pull off something on the optics, but I don't think they're going to get into congressional buy-in on the procedure" of freezing out Canada, said Welles Orr, an assistant U.S. Trade Representative under George H.W. Bush who is now a senior trade adviser at law firm Miller & Chevalier. Much of the trade pact dealt with auto manufacturing, as Detroit has increasingly seen jobs shipped south of the border where workers earn an average of $7.34 an hour making cars and $3.41 an hour in auto parts suppliers.

Canada, Mexico and the United States have been haggling over an update to the North American Free Trade Agreement for over a year now.

"We are in regular contact with our negotiating partners, and we will continue to work toward a modernized NAFTA", Austen said.

Freeland's spokesman said Canada would only sign a new agreement that is good for the country.

President Trump complained again on Monday about stiff Canadian tariffs on dairy products.

Lighthizer said the administration would notify Congress by Friday of the new agreement, which would allow the required 90 days' notice to get the pact signed by December 1.

"They recognized that NAFTA is critical for Mexico", said Duncan Wood, the director of the Wilson Center's Mexico Institute. Canada and the USA have been at odds over trade in recent months.

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"It is our wish, Mr. President, that now Canada will also be able to be incorporated in all this", he said on the phone.

This time a year ago, all three parties sat down to begin trilateral renegotiations of Nafta, a landmark free trade agreement that came into effect in 1994.

Jesus Seade, Lopez Obrador's designated chief negotiator, told Radio Formula in Mexico City, called the deal "an important first step" and said Lopez Obrador "was very happy" with the results.

"It is hard to extrapolate much out of it, as the USA continues to treat each country and deal on its own merit".

Mexico agreed to eliminate dispute settlement panels for certain anti-dumping cases, a move that could complicate talks with Canada, which had insisted on the panels. Sunset clause: The agreement will last for 16 years, and will be reviewed every six years. It will raise prices on Mexican-built cars and lead to higher prices in the United States, Autotrader analyst Michelle Krebs told the Detroit Free Press.

United States Trade Representative Robert Lighthizer, left, and Mexican Secretary of Economy Idelfonso Guajardo, right, walk into the White House on Monday August 27, 2018. Canada and Mexico are the U.S.'s second- and third-biggest trading partners, respectively, and an important destination for US exports.

Republican lawmaker Kevin Brady, chairman of the tax and trade-focused Ways and Means Committee, called on Canada to return to talks quickly "with the aim of concluding a modern, seamless three-way agreement".

Under the current law, about 62% of the parts in any auto sold in North America must be produced in the region or automakers have to pay import taxes.