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 had disparaged as one of the worst trade deals ever made.
The new agreement, the officials said, represents a “template for the Trump administration playbook for future trade deals” designed to boost worker earnings and strengthen the American economy.
September 17, 2018 at 10:58 AM EDT
Analysis | Is Canada 'ripping us off'? Or is it the best U.S. trade partner?
The $582 billion in goods exchanged last year between the two nations was about evenly divided between imports and exports.
By Ted Mellnik and Aaron Williams, undefined and undefined
Administration officials anticipate a fierce political battle to win congressional approval, especially if Democrats regain control of the House of Representatives in November.
“We will enter October with a trilateral North American trade deal,” said Dan Ujczo, a trade lawyer with Dickinson Wright. “This was the least difficult part. The heavy lift is going to be getting a trade deal through the next Congress in 2019 as well as ratification by Mexico’s new Congress and in Canada during a federal election year.”
Securing a replacement for the nearly 25-year-old NAFTA would be a major accomplishment for Trump and his chief trade negotiator, Robert E. Lighthizer. The president, long a NAFTA critic, has complained that the original agreement cost the United States millions of factory jobs and led to persistent U.S. trade deficits with its southern neighbor.
Trump plans to tout the new agreement in a news conference in the Rose Garden at the White House at 11 a.m. Monday.
In Monday morning tweets, Trump hailed it as “a historic transaction.”
“It is a great deal for all three countries, solves the many deficiencies and mistakes in NAFTA, greatly opens markets to our Farmers and Manufacturers, reduce Trade Barriers to the U.S. and will bring all three Great Nations closer together in competition with the rest of the world,” Trump said.
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 U.S. buys and sells globally.
He has refreshed existing trade deals with South Korea and, now, his North American neighbors, and threatened China with new trade barriers and investment limits unless it abandons its state-backed economic model.
Like no American president since the 1930s, Trump has embraced tariffs as his weapon of choice in a multi-front trade war that he vows will return prosperity to shuttered American factories even as critics complain they will cost several jobs for each one they create.
Officials touted auto industry provisions in the new agreement that 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 also addressed e-commerce with new intellectual property protections, including decade-long 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 includes stronger protections for labor rights, the environment and intellectual property than did Obama-era trade deals, the official said.
Administration officials have insisted 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.
Officials said they wanted it signed before the new Mexican president, left-wing populist Andrés Manuel López Obrador, took office in case he sought changes. But López Obrador said Friday that he would not try to reopen talks, calling into question the validity of the negotiators’ self-imposed deadline.
“The fact that the administration is so eager to press to a deal, despite [the] statement that he has no intention of renegotiating, suggests that the real quest here is for a deal to wave around during the next month of midterm campaigning,” said Phil Levy, a former White House economist in the George W. Bush administration.
Since the three-nation talks began in August 2017, negotiators have declared and missed several deadlines.
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, Navarro said.
The agreement will require that 75 percent of vehicles granted duty-free treatment be made in North America vs. 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.
NAFTA took effect in 1994 with bipartisan support from President Bill Clinton and former president George H.W. Bush, whose administration negotiated the original agreement.
But the was controversial from the start. Critics included American labor unions and Ross Perot, a businessman and third-party presidential candidate, who warned of a “giant sucking sound” as employers would relocate jobs to low-wage 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.”
Damian Paletta contributed to this report.