Donald Trump has announced that America and Mexico had agreed terms for a new trade deal, moving a step closer to delivering his campaign promise of renegotiating the North American Free Trade Agreement [Nafta].
The US president said he hoped the deal would replace Nafta but declared that he was ditching the old name because it had “bad connotations” for America, which he believes has suffered under the original terms.
Mr Trump challenged Canada – the third signatory to Nafta – to come back to the negotiating table and suggested that the country could be hit with tariffs on its car exports unless it agrees to talk in good faith.
The development is a significant step towards the Trump administration’s ambition to renegotiate Nafta, a 24-year-old trade agreement between America, Canada and Mexico.
However much remains to be achieved, with it unclear if Mexico would sign a deal that did not include Canada. The US Congress also has to approve whatever Mr Trump’s negotiating team is able to secure.
Mr Trump was a fierce critic of Nafta during his successful 2016 presidential campaign, blaming it for allowing US manufacturers to relocate over the border into Mexico and hurting American workers in the process.
Negotiations about changes have been going on for a year, including tens of thousands of hours of talks in seven separate rounds. Canada stepped away from the negotiating table weeks ago, leaving just America and Mexico.
On Monday Mr Trump and Enrique Peña Nieto, the Mexican president, announced that they had reached an “understanding” about how to change their trade relationship.
In a call put on speaker phone in the Oval Office so that reporters could listen in, both men thanks each other and said they believed both US and Mexican workers would benefit from the changes.
Mr Trump said the new terms were “incredible” and “much more fair” than those in Nafta, He also said he wanted the deal to be called the United States-Mexico Trade Agreement, ditching the original name.
“We’ll get rid of the name Nafta. It has a bad connotation because the United States was hurt very badly by Nafta,” the US president said. Mr Trump said he would “terminate” Nafta once the new agreements have been secured.
Details of the deal were still emerging on Monday. It reportedly changed the percentage of a car that needed to be made in America or Mexico to not be hit by a tariff when sold across the border. Rules that protect workers have also been strengthened.
America is now hoping Canada agrees to return to talks. US officials and the Mexican president both said they hope Canada will sign up to the new US-Mexico deal, making it a three-way agreement.
Whatever is agreed by negotiators must be sent to the US congress for ratification. That process will not reach a conclusion until after the November mid-term elections, at which point the Democrats could hold the House of Representatives.