Trump reaches preliminary deal with Mexico on NAFTA

Well it looks like Trump may have succeeded in reaching a renegotiated NAFTA deal with Mexico. They still have to get Canada on board and Congress to approve it, but it appears they are headed in that direction:

NY TIMES – 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.

The revised Nafta would also need congressional approval before it can go into effect, including votes by Republican lawmakers who have criticized some of the president’s plans for remaking the deal.

Many of the most significant changes simply update the pact to take into account the rise of the internet and the digital economy since the agreement was negotiated. But Mr. Trump’s advisers have also pressed for big alterations to the rules governing automobile manufacturing, in an effort to bring more car production back to the United States from Mexico.

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.

“Oh Canada”

Finishing the negotiation over Nafta will now hinge on bringing Canada back into the talks. America’s trade relations with Canada have chilled in recent months, as Mr. Trump has repeatedly criticized the country’s trade practices and Canadian leaders have insisted they will not rush to sign a deal that does not work in their favor.

On Friday, Canadian Foreign Minister Chrystia Freeland said that Canada would be “happy” to rejoin the talks once the United States and Mexico had made progress on their specific issues. “Once the bilateral issues get resolved, Canada will be joining the talks to work on both bilateral issues and our trilateral issues,” Ms. Freeland said.

About the time this news broke a few minutes ago, Trump tweeted this:

A big deal looking good with Mexico!

So it sounds like all the reporting on this is true.

It will be a big win for Trump and I know many will be happy to see his high tariffs on our allies finally go away.

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