Date
18 January 2020
Mexico's President Andres Manuel Lopez Obrador speaks at a news conference at the National Palace in Mexico City on Tuesday. Photo: Reuters
Mexico's President Andres Manuel Lopez Obrador speaks at a news conference at the National Palace in Mexico City on Tuesday. Photo: Reuters

US, Canada, Mexico sign fresh pact to replace NAFTA

Top officials from Canada, Mexico and the United States signed a fresh overhaul of a quarter-century-old trade pact that aims to improve enforcement of worker rights and hold down prices for biologic drugs by eliminating a patent provision, Reuters reports.

The signing ceremony in Mexico City on Tuesday launched what may be the final approval effort for US President Donald Trump’s three-year quest to revamp the 1994 North American Free Trade Agreement (NAFTA), a deal he has blamed for the loss of millions of US manufacturing jobs.

The event at the National Palace in Mexico City was attended by Mexico President Andres Manuel Lopez Obrador, Canadian Deputy Prime Minister Chrystia Freeland, US Trade Representative Robert Lighthizer, and US White House adviser Jared Kushner.

Lighthizer called it “a miracle” that actors from across the political spectrum had come together, saying it was a testament to the benefits of the deal. Lopez Obrador credited Trump for working with him, while Freeland celebrated a win for multilateralism.

“We have accomplished this together at a moment when, around the world, it is increasingly difficult to get trade deals done,” Freeland said.

The US-Mexico-Canada Agreement (USMCA) was signed more than a year ago to replace NAFTA, but Democrats controlling the US House of Representatives insisted on major changes to labor and environmental enforcement before bringing it to a vote.

The delay at times threatened to scuttle the deal, creating investment uncertainty in all three countries and worrying US farmers already suffering tariffs stemming from Trump’s trade war with China.

Intense negotiations over the past week among Democrats, the Trump administration, and Mexico produced more stringent rules on labor rights aimed at reducing Mexico’s low-wage advantage, including verification of compliance at the factory level by independent labor experts.

“It is infinitely better than what was initially proposed by the administration,” House Speaker Nancy Pelosi told a news conference in Washington, adding that USMCA was now ready for a House vote.

Some Mexican business groups fear that Lopez Obrador and his chief negotiator, Deputy Foreign Minister Jesus Seade, have ceded too much, and called the labor verification a violation of Mexican sovereignty.

Republican and Democratic US lawmakers say there is broad support for revising the pact, which backers say encompasses US$1.2 trillion in annual trade across the continent and supports 12 million US jobs and a third of American agricultural exports.

US House Ways and Means Committee Chairman Richard Neal, a Democrat, said sections of the text would be reviewed by lawmakers, but he saw no reason for “unnecessary delays” in bringing it to a vote on the House floor.

Trump launched a renegotiation of NAFTA in his first year in office, intent on delivering on his 2016 campaign promise to replace what he has derided as the “worst deal ever”. Canadian and Mexican leaders reluctantly agreed to join the negotiations with their largest trading partner.

“America’s great USMCA Trade Bill is looking good. It will be the best and most important trade deal ever made by the USA. Good for everybody,” Trump tweeted on Tuesday.

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