New Trade Deal Has Emerged To Replace NAFTA

A new U.S. Mexico Canada Agreement, or USMCA, has been signed to replace the North American Free Trade Agreement (NAFTA). President Trump signed the trade deal alongside Canada’s Prime Minister Justin Trudeau and Mexico’s President Enrique Peña Nieto in Buenos Aires. The signing event and the leaders’ remarks were livestreamed.

NAFTA created a free trade zone between the three countries back in 1994, creating one of the world’s largest free trade zones. Then, the Trump administration imposed 25 percent tariffs on steel and 10 percent duties on aluminum on March 23 under Section 232 of the Trade Expansion Act of 1962. Mexico and Canada were initially exempt from the tariffs pending the outcome of the renegotiation of NAFTA, but the exemption was removed June 1.

The tariffs set off retaliatory moves by the other countries. After a great deal of back and forth, intense negotiations began with the aim of creating a new trade pact. The USMCA deal emerged in early October. The signing event is now taking place nearly two months later, on Peña Nieto’s final day in office.

The Trump administration says that all three countries will benefit from the deal, even though the tariffs on steel and aluminum remain in place. U.S. Trade Representative Robert Lighthizer said in a statement, “We want an agreement that is fair to Mexico and fair to Canada but maintains the integrity of the president’s steel and aluminum programs which have been very successful for the U.S.”

The deal will require ratification by all three countries’ legislatures before taking effect. That may prove problematic for President Trump. A few Republican senators have been pushing to vote on the agreement during the lame-duck session, but some Democrats have already been opposing the deal due to the labor and environmental provisions in the pact. Despite this, President Trump has expressed confidence that the trade deal will be approved by Congress.

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