U.S., Mexico trade agreement to supersede NAFTA

WASHINGTON — President Trump is hailing a preliminary trade agreement with Mexico, which is designed to supersede the 24-year-old North American Free Trade Agreement (NAFTA), as "one of the biggest trade deals ever."

Mr. Trump has been explicitly hostile about NAFTA since he began his campaign for the presidency. The new agreement, he said, will be known as the United States-Mexico Trade Agreement.

"NAFTA has a lot of bad connotations, because it was a ripoff," Mr. Trump said during a televised conference on Aug. 27.

Outgoing Mexican President Enrique Pena Nieto joined Mr. Trump via audio for the conference. Mr. Trump thanked both Mr. Pena and incoming President Andres Lopez Obrador for their help in negotiating the trade deal.

Mr. Trump provided no details about the agreement, but he said he expected it to be completed in November. He was noncommittal as to whether Canada, the third partner of NAFTA, would be included in the deal with Mexico.

It might be included, or the U.S. might choose to negotiate a separate agreement with Canada, he said.

"Canada has placed tariffs of about 300 percent on our dairy products, and there is no way we will put up with that," he said. "The easiest thing would be to put tariffs on their cars coming in."

Mr. Trump said negotiations with Canada would begin almost immediately, and that he would call Canadian Prime Minister Justin Trudeau soon to discuss a trade agreement.

NAFTA, which went into effect Jan. 1, 1994, has been controversial since its inception. The United Steelworkers (USW) union and other labor unions have decried the agreement's alleged displacement of jobs, while the auto industry insists NAFTA is crucial to a sound North American market.

"(A) diminished NAFTA endangers the success and competitiveness of our industry, reverses our manufacturing comeback, and places many jobs in the auto sector at risk," said the Driving American Jobs coalition — including the Motor & Equipment Manufacturers Association (MEMA) and the Alliance of Automobile Manufacturers (AAM) — in an October 2017 statement.

In response to Mr. Trump's announcement, MEMA expressed reservations about a potential cap on Mexican motor vehicle parts into the U.S. and the need for Canada to be included as well.

MEMA said it is concerned the potential cap on Mexican goods " may serve to decrease American manufacturing jobs and exports and put U.S. businesses at a global disadvantage — all while increasing costs to consumers.

MEMA prefaced its remarks by saying, "While we appreciate the progress made by the Trump Administration and the Mexican government, we encourage a renewed focus on a three-party agreement that includes Canada."

In May 2018, three months before Mr. Trump announced the new pact with Mexico, negotiators for the U.S., Canada and Mexico said that NAFTA talks would continue. This was greeted skeptically at that time by USW President Leo W. Gerard.

"NAFTA negotiators should take time to hammer out a good deal, rather than causing further damage through the continued outsourcing of jobs and production," Mr. Gerard said.