Home Academic Diplomacy United States and Mexico Sign New Trade Deal to Possibly Replace NAFTA

United States and Mexico Sign New Trade Deal to Possibly Replace NAFTA

The United States of America and Mexico today announced that they had agreed to a new deal that replaces significant portions of NAFTA, the North American Free Trade Agreement that was in effect between the United States, Mexico and Canada. Announcing it from the Oval Office of the White House, President Donald Trump declared the preliminary deal between the two countries to be ‘incredible.’

The announcement of the deal comes after months of US-Mexico relations being under the cloud of President Trump’s remarks on Mexicans while campaigning for the Presidency. The President had recently praised Mexican efforts to come to an understanding with the US, especially those of Mexican President-elect Andres Manuel Lopez Obrador.

Under the preliminary agreement, 75% of the parts in any car sold in North American would have to be produced in the United States or Mexico, up from the previous 62%. Further, the new agreement also ensures higher labour standards by requiring that 40 – 45% parts sold in cars are produced by workers earning at least $16/hour.

However, what the future of NAFTA will be is left uncertain as Canada; the other party to NAFTA wasn’t privy to the deal agreed to between the United States and Mexico. President Trump and Canada haven’t enjoyed the best of relations, especially since Trump imposed additional steel and aluminum duties on Canadian exports.

While both the Mexican President and President Trump have urged Ottawa to join negotiations soon, it would seem that the US President is already mulling changing the name of the new deal to the ‘United States-Mexico Trade Agreement’ because of supposed bad connotations associated with NAFTA.

While it seems that the new trade deal has resolved any differences between the United States and Mexico, a similar concerted endeavor would be required by the heads of States of the US and Canada to smoothen the ties between the two Northern neighbors.