Canada agrees to join trade deal with U.S., Mexico
Canada agreed late Sunday to join the trade deal that the United States and Mexico reached last month, meeting negotiators' self-imposed midnight deadline designed to allow the current Mexican president to sign the accord on his final day in office and giving President Donald Trump a big win on trade.
The new treaty, preserving the three-country format of the original North American Free Trade Agreement favored by business groups and congressional Republicans, is expected to be signed by Trump and his Canadian and Mexican counterparts in 60 days, with Congress likely to act on it next year.
Senior administration officials told reporters on a late-night conference call that the deal validated Trump's approach to trade policy and fulfilled an important campaign promise to overhaul an agreement he disparaged as one of the worst trade deals ever made.
The new agreement represents a "template for the Trump administration playbook for future trade deals" designed to boost worker earnings and strengthen the U.S. economy.
Administration officials anticipate a fierce political battle to win congressional approval, especially if Democrats regain control of the House of Representatives in November.
Securing a replacement for the nearly 25-year-old NAFTA would be a major accomplishment for Trump, long a NAFTA critic, and his chief trade negotiator, Robert E. Lighthizer.
After 20 months in the White House, the president has upended relations with countries that account for roughly two-thirds of the $3.9 trillion in goods that the United States buys and sells globally. He has refreshed existing trade deals with South Korea and, now, his North American neighbors, and he has threatened China with new trade barriers and investment limits unless it abandons its state-backed economic model.
Officials touted auto industry provisions in the new agreement, which they said would return "billions of dollars of production" to the United States; improved access to Canadian dairy markets; and a review every six years that would prevent the new agreement from becoming outdated.
The treaty also addressed e-commerce with new intellectual property protections, including decadelong patents for biologic drugs.
"Everything we're doing is designed to lead to higher incomes, higher wages and a higher standard of living for Americans," said one senior administration official, who insisted upon anonymity to brief reporters. The deal also included stronger protections for labor rights, the environment and intellectual property than did Obama-era trade deals, the official said.
Administration officials have insisted all month that they needed to release the text of the new deal - with both countries or only Mexico - by Sept. 30. That would comply with a congressional notification requirement and allow Mexican President Enrique Peña Nieto to sign the deal on his last day in office, they said. But Mexico's president-elect, left-wing populist Andrés Manuel López Obrador, said Friday that he would not try to reopen talks, calling into question the validity of the negotiators' self-imposed deadline.
The new deal preserves a regional economic unit that enables North American manufacturers, particularly in the auto industry, to compete against global rivals. Canada and Mexico rank first and second among export markets for U.S. companies. Total U.S. trade with the two countries last year topped $1.1 trillion.
A central objective for the new agreement is restoring "North America as a manufacturing powerhouse" by encouraging U.S. companies to use domestic suppliers rather than companies based elsewhere, said Peter Navarro, one of Trump's closest White House trade advisers.
The agreement will require that 75 percent of vehicles granted duty-free treatment be made in North America versus the current 62.5 percent mandate. It will also require greater use of domestic steel and other materials and establish a new requirement for work to be performed by those earning at least $16 an hour, which will benefit the United States and Canada at the expense of Mexico.
The president last week said he would no longer use the NAFTA name, instead christening the new deal "the U.S.-Mexico-Canada agreement," or USMCA.
"USMCA will give our workers, farmers, ranchers and businesses a high-standard trade agreement that will result in freer markets, fairer trade and robust economic growth in our region," Lighthizer and Canadian Foreign Minister Chrystia Freeland said in a joint statement released less than 30 minutes before the deadline. "It will strengthen the middle class, and create good, well-paying jobs and new opportunities for the nearly half billion people who call North America home."