Trump Says New Trade Agreement To Replace NAFTA Is A Campaign Promise Kept

Oct 1, 2018
Originally published on October 2, 2018 12:07 am

Updated at 3:45 p.m. ET

The U.S. and Canada reached a deal to replace the North American Free Trade Agreement, signed a quarter-century ago, with a new pact that the Trump administration says is easier to enforce.

In remarks in the Rose Garden formally announcing the agreement, President Trump called it "the most important trade deal we've ever made by far."

Ahead of a midnight deadline set by the White House, Trump approved changes that essentially revamp the 1993 NAFTA deal, bringing Canada on board after Mexico had already agreed in August.

In addition, the two countries agreed to shield Canada from any future automobile tariffs imposed by the U.S.

The agreement, called the U.S. Mexico Canada Agreement, or USMCA, gives U.S. dairy farmers greater access to the Canadian market. It also preserves a dispute resolution system that Canada likes but which the Trump administration had hoped to phase out.

Trump is expected to sign the deal, along with Canadian Prime Minister Justin Trudeau and Mexican President Enrique Peña Nieto, before Peña Nieto leaves office in early December. It would then be submitted to the U.S. Congress for approval early next year.

"If it's fair, I think it will pass" Congress, Trump said in response to a question. "I think it will pass, I think it will pass easily," he added. Later, however, Trump said he "was not at all confident" that lawmakers will approve of the deal, citing the 2020 election.

"Throughout the campaign I promised to renegotiate NAFTA," Trump said, referring to one of his major campaign themes. "Today," he said, "we have kept that promise."

The new agreement seemed to win support of one key Democrat, Senate Minority leader Chuck Schumer, D-N.Y. "As someone who voted against NAFTA and opposed it for many years, I knew it needed fixing," Schumer said in a statement from his office. "The president deserves praise for taking large steps to improve it. However, any final agreement must be judged on how it benefits and protects middle-class families and the working people in our country. "

A joint statement from U.S. Trade Representative Robert Lighthizer and Canadian Foreign Minster Chrystia Freeland says, "USMCA will give our workers, farmers, ranchers, and businesses a high-standard trade agreement that will result in freer markets, fairer trade and robust economic growth in our region."

U.S. business groups welcomed the agreement, which preserves a continent-wide free-trade zone. Tom Donohue, president of the U.S. Chamber of Commerce, had warned that a deal that excluded Canada would be a nonstarter.

Labor unions reserved judgment, saying they need more time to assess the deal's worker protections.

Mexico had earlier agreed with the U.S. to include stricter rules of origin on automobiles, so cars will have to include more North American content in order to be sold duty-free in the U.S. The rules also require that a portion of cars be made in factories paying at least $16 an hour — a provision that could shift some auto manufacturing from Mexico to the United States.

The agreement also updates NAFTA with new provisions governing digital trade and intellectual property.

It does not affect tariffs on imported steel and aluminum that the U.S. imposed this year, nor the retaliatory tariffs that Canada and Mexico imposed in response.

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ARI SHAPIRO, HOST:

It looks like North America will remain a free trade zone after all. Late last night, Canada agreed to join the U.S. and Mexico in an updated version of the North American Free Trade Agreement. It will no longer be called NAFTA but rather the USMCA. NPR's Scott Horsley reports.

SCOTT HORSLEY, BYLINE: President Trump has long railed against NAFTA, calling it one of the worst trade deals ever negotiated. But in the White House Rose Garden this morning, Trump celebrated what was billed as a new and improved trade deal. Trump called it a positive step for both the country and the world.

(SOUNDBITE OF ARCHIVED RECORDING)

PRESIDENT DONALD TRUMP: Once approved by Congress, this new deal will be the most modern, up-to-date and balanced trade agreement in the history of our country with the most advanced protections for workers ever developed.

HORSLEY: In signing on to the deal, Canada agreed to open up its long-protected dairy market, at least a little bit. Trump says that means new opportunity for American dairy producers to sell their products north of the border.

(SOUNDBITE OF ARCHIVED RECORDING)

TRUMP: Including milk, butter, cheese, yogurt and ice cream, to name a few. I want to be very specific.

(CHEERING, APPLAUSE)

HORSLEY: But Canada is still expected to buy more than 90 percent of its dairy products from Canadian suppliers. Former U.S. Agriculture Secretary Tom Vilsack, who now heads the Dairy Export Council, says the new deal is an improvement for American dairy farmers but not by much.

TOM VILSACK: We're looking at an incremental increase in access. We're not certainly looking at an opening-wide of the market, but we are seeing an increase.

HORSLEY: More importantly perhaps, the agreement is designed to prevent Canadian dairy farmers from dumping surplus skim milk powder on the world market at what the U.S. views as artificially low prices. In exchange for these concessions, the U.S. agreed not to scrap a NAFTA-era process for resolving trade disputes even though Trump wanted to. Preserving that arbitration process was a top priority for Canadian Prime Minister Justin Trudeau.

(SOUNDBITE OF ARCHIVED RECORDING)

PRIME MINISTER JUSTIN TRUDEAU: When your trading partner is 10 times your size, you need rules. You need a level playing field.

HORSLEY: The U.S. and Mexico had reached a tentative trade deal more than a month ago, but Canada didn't agree to sign on until late last night, just hours before a White House deadline. While Trudeau cautions there are still hoops to jump through before the deal is finalized, the threat of a trade agreement that left Canada on the sidelines has been averted.

(SOUNDBITE OF ARCHIVED RECORDING)

TRUDEAU: What I can say is that free and fair trade in North America is in a much more stable place than it was yesterday.

HORSLEY: Markets rallied on the news with the Dow Jones Industrial Average gaining nearly 200 points. Trump, Trudeau and Mexican President Enrique Pena Nieto are expected to sign the deal within 60 days, just before Pena Nieto leaves office. It will then be up to the incoming U.S. Congress to decide whether to approve the agreement.

The president's trade representative, Robert Lighthizer, says he expects the deal to win backing from a lot of Democrats as well as Republicans. Celeste Drake, who oversees trade policy for the AFL-CIO, says while she still has a lot of questions about the fine print, the administration has been attentive to the concerns of organized labor.

CELESTE DRAKE: Whatever else is going on in other parts of the administration, Ambassador Lighthizer has been very serious about listening to our ideas and wanting the support of working families.

HORSLEY: White House aides say the new deal is a vindication of the president's hard-nosed negotiating tactics which have included stiff tariffs on U.S. allies and the threat of even harsher protectionist measures. The deal leaves intact for now U.S. tariffs on imported steel and aluminum from Canada and Mexico as well as the retaliatory tariffs on U.S. exports the North American neighbors imposed in response. Scott Horsley, NPR News, Washington. Transcript provided by NPR, Copyright NPR.