The United States and Mexico have reached a preliminary agreement on NAFTA. The new negotiations have not included Canada, another partner to the deal, but specifically focused on the auto industry.
President Trump has called the existing NAFTA deal one of the worst in history and a new agreement could be a big win for the president in his ongoing trade war with Canada, Mexico, the E.U., and China.
According to the New York Times:
WASHINGTON — The United States and Mexico have reached agreement to revise key portions of the 24-year-old North American Free Trade Agreement and a preliminary deal could be announced on Monday, a crucial step toward revamping a trade pact that has appeared on the brink of collapse during the past year of negotiations.
Reaching an agreement on how to revise some of the most contentious portions of what President Trump has long called the worst trade pact in history would give Mr. Trump a significant win in a trade war he has started with countries around the globe, including Mexico, Canada, the European Union and China.
Still, a preliminary agreement between the United States and Mexico would fall far short of actually revising Nafta. The preliminary agreement still excludes Canada, which is also a party to Nafta but has been absent from talks held in Washington in recent weeks. It centers on the rules governing the automobile industry and leaves aside other contentious issues that affect all three countries.
…
To qualify for zero tariffs under Nafta, car companies would be required to manufacture a greater proportion of an automobile’s value in North America under the new rules. They will also be required to use more local steel, aluminum and auto parts, and have a certain proportion of the car made by workers earning at least $16 an hour, a boon to both the United States and Canada.
The absence of Canada will make for a contentious road ahead, as the U.S. and Mexico will have to work to get Canada on board. Congress will also have to ratify the deal once one is fully reached. But the agreement in principle between the U.S. and Mexico is an encouraging sign and another win for the Trump administration.
