The bilateral agreement, which President Trump says is “much simpler, much better,” excludes Canada.
The United States and Mexico, at the exclusion of North American Free Trade Agreement partner Canada, on Monday morning announced a separate bilateral trade deal.
President Donald Trump, who held a televised joint press conference in the Oval Office with Mexico’s outgoing president Enrique Pena Nieto on the telephone, said the deal is “much simpler, much better for both countries.”
“We’ll get rid of the name NAFTA because it has a bad connotation because the United States was hurt very badly by NAFTA,” Trump said.
Pena Nieto also called the new trade agreement with the United States “positive” for both countries, but added, “It’s our wish that Canada will also be incorporated in all of this.” Mexico’s new incoming president, Andrés Manuel López Obrador, who takes office Dec. 1, has been included in the trade agreement negotiations.
The Office of the U.S. Trade Representative said the trade agreement with Mexico, when finalized, will strengthen intellectual property and digital trade protections.
The agreement also will require Mexico to raise its de minimis shipment value from $$50 to $100. “Shipment values up to this level would enter Mexico without customs duties or taxes, and with minimal formal entry procedures, making it easier for more businesses, especially small- and medium-sized ones, to be a part of cross-border trade,” USTR said.
For the agricultural industry, USTR said the new agreement will commit to reduce “trade distorting policies,” increase transparency over sanitary and phytosanitary policies, and maintain zero tariffs on agricultural products traded between the two countries.
Mexico has agreed to not restrict market access for U.S. cheeses labeled with certain names, and the two countries agreed to new labeling and certification provisions for the wine and distilled spirits trade. USTR noted that Mexico agreed to continue recognition of Bourbon Whiskey and Tennessee Whiskey as distinctive U.S. products, while the U.S. agreed to continue recognition of Tequila and Mezcal as distinctive products of Mexico.
According to USTR, the U.S.-Mexico agreement would require a 75-percent U.S.- and Mexico-made parts content requirement for automobiles manufactured and traded between the two countries. The Trump administration said this should stimulate reshoring of auto parts production in the United States.
It also will “close gaps in the current NAFTA agreement that incentivized low wages in automobile and parts production” by requiring that 40 percent to 45 percent of auto content be made by workers earning a minimum of $16 per hour, USTR said.
USTR said the trade agreement includes new provisions that will increase U.S. and Mexican textile and apparel production, as well as enhance customs enforcement over this trade.
In addition, the two countries’ negotiators reached agreement on new provisions covering trade in specific manufacturing sectors, including information and communication technology, pharmaceuticals, medical devices, cosmetics and chemicals.
Trump said he would like to hold similar bilateral discussions with Canada as early as this week, which could result in Canada either joining the U.S.-Mexico trade agreement or produce a second bilateral agreement between the U.S. and Canada. Trump criticized Canada’s high import tariffs on dairy product imports and said they would not be allowed to persist under a new trade deal with Canada.
The White House raised the idea of reaching separate trade agreements with Mexico and Canada last month.
Meanwhile, the total value of cross-border trade between the United States and its partners in the North American Free Trade Agreement — Canada and Mexico — has remained strong, climbing another 6.3 percent in June to $106.07 billion compared to the same month a year ago, according to the latest data from the U.S. Department of Transportation’s Bureau of Transportation Statistics (BTS). Year-over-year growth has been posted in each of the last 20 months for which after-the-fact data is available.
U.S., Mexico reach trade deal
