Wall Street surges on US-Mexico trade deal to replace NAFTA
- Author: Zachary Reyes Aug 29, 2018,
Aug 29, 2018, 0:30
- Canada's minister of foreign affairs is scheduled to hold talks in Washington on Tuesday in hopes of reaching a trade agreement with the United States, an urgent response after President Donald Trump announced a deal with Mexico on Monday that left out Canada.
Instead, senior USA officials told reporters the agreement had been extended for 16 years but would be reviewed every six years. Negotiators also agreed to increase the percentage of vehicles built in factories paying an average wage of at least $16 an hour.
Investors are betting on a deal materializing soon between Canada and the US, according to analysts, who say the Canadian market will follow its number one trading partner higher, despite the hurdles facing an agreement.
NAFTA, which came into effect at the beginning of January 1994, lifted tariffs on virtually all goods traded among the US, Canada, and Mexico. Under it, to sign something before December 1, when Mexico's president-elect is due to take office, U.S. Trade Representative Robert Lighthizer said he hopes to give notice of a deal by the end of this week.
Trump has frequently condemned the 24-year-old NAFTA trade pact as a job-killing "disaster" for American workers.
"What consensus is missing is that companies with a majority of revenues outside of Canada have been outperforming most of 2018 - NAFTA is not the problem", Belski said.
"I would say that would be not only very, very bad for the Canadian economy, but that would also be bad for the US economy".
"I think it is fair to say we'll do a rebalancing", Lighthizer said. The White House told Congress past year that it would renegotiate NAFTA, but never said it would start talks on an entirely new deal.
"It will either be a tariff on cars, or it will be a negotiated deal", the USA president said.
This deal from Mexico is far from over. He wasn't authorized by Congress to negotiate a bilateral with Mexico, leaving Canada out in the cold.
Officials have said that the agreement would remain in force for 16 years, with a review every six.
Much of the business world has been anxious about Trump's trade policies, and the stock market reacted positively to the news of a deal. Trump said he would talk to Canadian Prime Minister Justin Trudeau soon.
But the president hinted that all might not be smooth sailing from here, suggesting he could cut Ottawa out of the deal reached with Mexico and adding that he wanted to change the agreement's name.
Peña Nieto greeted Trump and called the deal "something very positive for the United States and Mexico" but stressed that Canada must be part of the agreement.
The US-Mexico NAFTA deal opens the door for Canada to immediately rejoin the talks and is a major step forward in updating the accord.
The new deal will affect farmers, although the president hasn't released specific details on the agriculture changes.
An official told the paper how Trump 'thought talking about sealing the deal in front of reporters would be not just interesting but important for the American people to see'.
For instance, under NAFTA, cars exported from one signatory to the next are free of tariffs as long as 62.5 percent of their content comes from a country in the agreement.