Late Sunday tripartite deal reworks NAFTA into USMCA
October 1, 2018
Print this page
Donald Trump today praised Canada’s entry into a reworked NAFTA pact with the United States and Mexico after the two countries forged a last-minute agreement to salvage the trilateral trade accord, delivering a key win for the U.S. president.
The deal, announced on Sunday, helped preserve the nearly quarter-century old, $1.2 trillion open-trade zone among the three North American neighbours that Trump had long sought to rip up as part of his vow to shake up global trade.
The new United States-Mexico-Canada Agreement (USMCA) is aimed at bringing more jobs into the United States, a top Trump campaign pledge.
While it avoided tariffs, the deal will make it harder for global auto makers to build cars cheaply in Mexico and it also preserved a trade dispute settlement mechanism sought by Canada to protect its industries from U.S. anti-dumping tariffs even as Ottawa agreed to open up its dairy markets to U.S. farmers, according to Reuters.
The United States and Mexico had already clinched a bilateral agreement in August. U.S. officials intend to sign the new trilateral deal at the end of November, after which it would be submitted to the U.S. Congress for approval, according to a senior U.S. official.
Trump on Monday called U.S. agreement with its neighbour to the north “wonderful” and “a historic transaction.”
“It is a great deal for all three countries, solves the many deficiencies and mistakes in NAFTA, greatly opens markets to our Farmers and Manufacturers, reduce Trade Barriers to the U.S. and will bring all three Great Nations closer together in competition with the rest of the world,” Trump wrote on Twitter.
Optimism about a reconstituted free trade agreement among the United States, Canada and Mexico and what it could mean for trade relations elsewhere helped world markets kick off the fourth quarter of the year in a positive vein.
The United States and Canada salvaged NAFTA as a trilateral pact with Mexico, rescuing a $1.2 trillion open-trade zone that had been about to collapse after nearly a quarter century.
According to Reuters, Japan’s Nikkei .N225 rose 0.5 per cent to a 27-year high, followed by gains in European stocks markets, with Italian shares in particular clawing back some of last week’s losses and U.S. stock futures indicating a sharply higher open on Wall Street.
The Canadian dollar was up 0.85 per cent against the dollar to a four-month high and the Mexican peso hit its highest in over seven weeks, up nearly a per cent on the day.
“The trade deal is helping risk appetite across the board, especially the Canadian dollar, and that will likely lift appetite for emerging-market currencies across the board,” Manuel Oliveri, a currency strategist at Credit Agricole in London, told Reuters.