The United States, Canada and Mexico have reached a new trade pact that President Donald Trump has hailed as “a great deal” for all three countries.
The agreement has been rebranded from NAFTA to USMCA, to the satisfaction of Trump, who had railed against NAFTA and threatened to cancel it.
The new pact known as the United States-Mexico-Canada Agreement (USMCA) “solves the many deficiencies and mistakes” in the 24-year-old North American Free Trade Agreement it replaces, Trump said after accomplishing one of his signature policy initiatives.
USMCA “greatly opens markets to our Farmers and Manufacturers” while reducing trade barriers “and will bring all three Great Nations closer together in competition with the rest of the world. The USMCA is a historic transaction!” the president said.
The rewritten deal “will result in freer markets, fairer trade and robust economic growth in our region,” a joint statement from US Trade Representative Robert Lighthizer and Canada’s Foreign Affairs Minister Chrystia Freeland said late Sunday after six weeks of intense talks and more than a year of fraught, broader negotiations.
In the end, Canada and the United States overcame their differences after both sides conceded some ground to reach a deal covering a region of 500 million inhabitants and which conducts about $1 trillion in trade a year.
“It’s a good day for Canada,” Canadian Prime Minister Justin Trudeau said Sunday night.
Mexican Foreign Minister Luis Videgaray tweeted that the deal was good for his country “and for North America”.
The political stakes were high.
Trump, who pursues an “America First” policy on trade, needs to look strong heading into the November midterm elections where his Republican Party is fighting to keep control of Congress.
Trudeau, for his part, did not want to be seen as caving in before next year’s general election in Canada. But on the other hand, it risked being frozen out of a US-Mexican deal reached in August.
The Canadian dollar jumped to a five-month high in Asian trade after initial reports of the agreement, which also helped Tokyo’s benchmark Nikkei index touch a 27-year high on Monday.
“The news about NAFTA gave an extra boost to the market,” said Toshikazu Horiuchi, a broker at IwaiCosmo Securities.
Early Monday a copy of the deal’s 34 chapters was posted on the US Trade Representative’s website.
The pact can now be signed before Mexico’s President Enrique Pena Nieto leaves office December 1, the date that caused the last-minute flurry of activity.
US law requires the White House to submit the text to Congress 60 days before signing — and officials barely made it by the midnight deadline.
In order to reach the deal Canada agreed to open its dairy market further to US producers, and — in return — Washington left unchanged the dispute settlement provisions.