When is the NAFTA renegotiation not? When it is a preliminary bilateral U.S.-Mexico trade agreement.
On Monday, Aug. 27, President Donald Trump and the Office of the U.S. Trade Representative (USTR) announced “a preliminary agreement in principle” on bilateral trade with Mexico. Trump additionally announced that he would be terminating the North American Free Trade Agreement (NAFTA) in his congratulatory call with Mexican President Enrique Peсa Nieto.
As of press time, the actual text of the agreement had not been released and it was unclear when the full agreement would be available. However, both the president and the Office of the USTR had released some topical information about the planned agreement, as well as expectations for the future.
In a trio of “factsheets,” the USTR described the plan as a preliminary agreement in principle that will “support mutually beneficial trade leading to freer markets, fairer trade, and robust economic growth in North America.”
The USTR factsheet specifically focused on agriculture described the new plan as continuing the zero-tariff level on agricultural products between the U.S. and Mexico.
Other agricultural and food-related provisions included:
• Not to use export subsidies or World Trade Organization (WTO) special agricultural safeguards for products exported into each other’s markets.
• Domestic support for producers should have minimal or no trade-distorting effects.
• Improved transparency surrounding export restrictions on food security grounds, as well as a commitment to “strengthen disciplines for science-based” sanitary and phytosanitary measures.
• Protections for current biotechnology, including new technologies like gene editing.
• Protections on proprietary food formulas and some appellations—such as Bourbon Whiskey, Tennessee Whiskey, Tequila, and Mezcal—while agreeing to standards for geographical indications (GIs) that will prevent common names being treated as GIs.
The other two USTR factsheets focus on intellectual property, digital property and trade, labor, and the environment on the one hand, and manufacturing, automotive parts and construction, and textiles on the other.
One of the factsheets summarized the labor chapter in the agreement. The summary said the deal will require 40-45 percent of auto content be made by workers earning at least $16 per hour. Additionally, the summary described protections for workers to engage in protective bargaining, prohibitions on the trade of goods produced by forced labor, and protections for migrant laborers.
Regarding the environment, a factsheet summarized the environmental provisions of the U.S.-Mexico trade agreement as making environmental provisions enforceable. Specific details cited included prohibitions of fisheries subsidies, added protections on certain marine life, new efforts to combat wildlife trafficking, and “first-ever articles to … support sustainable forest management, and ensure appropriate procedures for environmental impact assessments.”
Look for additional reporting as the full agreement becomes available.
NAFTA and Canada
During his Monday morning call with Mexican President Peсa Nieto, Trump called the trade agreement between the U.S. and Mexico “a big day for trade.” However, he also gave it a name, and—in doing so—named the fate of NAFTA.
“We’re going to call it the United States-Mexico Trade Agreement, and we’ll get rid of the name NAFTA,” he said, as presented in a written transcript of the call put out by the White House. “I think it’s an elegant name. I think NAFTA has a lot of bad connotations for the United Stated because it was a rip-off.”
Throughout the conversation, Trump did not refer to the new plan as “NAFTA.”
Later in the conversation, Trump revealed his plans to “terminate the existing deal,” contextually referring to NAFTA, though he said he was unsure of the timetable.
Throughout the conversation, Peсa Nieto—speaking through a translator—repeatedly referred to the agreement as NAFTA and stressed his desire that Canada be included in the agreement.
“I really hope and I desire—I wish—that the part with Canada will be materializing in a very concrete fashion; that we can have an agreement the way we proposed it from the initiation of this renegotiation process, a tripartite.”
Trump variously commented that discussions with Canada had not started yet, but that they would soon and that he would be “calling the prime minister very soon.” He entertained the possibility of either crafting a separate deal with Canada or including them into the U.S.-Mexico agreement.
“But one way or the other, we have a deal with Canada. It will either be a tariff on cars, or it will be a negotiated deal. And, frankly, a tariff on cars is a much easier way to go. But perhaps the other would be better for Canada.”
Ministry of Foreign Affairs spokesperson Adam Austen said in a statement to Canadian news outlets that the country is encouraged by the talks. “Progress between Mexico and the United States is a necessary requirement for any renewed NAFTA agreement.” — Kerry Halladay, WLJ editor
