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US, Trump, Mexico NAFTA trade deal: auto, agricultural details

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donald trump
US
President Donald Trump speaks about a new trade deal with Mexican
President Enrique Pena Nieto via speakerphone

Win McNamee/Getty Images


  • The US and Mexico announced a preliminary trade deal on
    Monday as part of President Donald Trump’s desire to
    renegotiate the North American Free Trade Agreement.
  • The deal includes stricter rules for autos, textiles,
    and many other goods.
  • It also includes new regulations concerning
    intellectual property and digital goods.
  • Here are the highlights of the deal and some initial
    reaction.

US President Donald Trump and Mexican President Enrique Peña
Nieto
announced a new US-Mexico trade deal
on Monday, completing a
major step toward the renegotiation of the North American Free
Trade Agreement, or NAFTA.

The deal is the result of five weeks of intense one-on-one talks
between the Trump administration and Mexican officials.

It’s not final, since Canada is still involved in the NAFTA
process, but Trump said the US and Mexico could move forward with
a bilateral agreement if the Canadians drive a hard bargain.

Here’s a rundown of the major changes in the agreement. It would:

  • Require that for a car to move between the US and Mexico
    without being subject to tariffs, 75% of the car must originate
    in a NAFTA country. This would be up from the current 62.5%.
  • Establish that 40% to 45% of a car or truck’s content must be
    made by workers earning more than $16 an hour. This is a push
    that could help the US retain more auto work. US auto unions have
    been fighting for such a change for some time.
  • Strengthen rules of origin for “chemicals,
    steel-intensive products, glass, and optical fiber” goods.
    Similar to autos, this would strengthen the requirements for
    goods to move across the US-Mexican border tariff-free.
  • Toughen rules for textile supply chains to push countries
    toward producing more apparel domestically. 
  • Strengthen enforcement mechanisms for intellectual property
    violations and protect intellectual property. For instance, the
    deal would set the minimum for copyright protections at 75 years.
  • Establish a zero-tariff level for digital content such as
    e-books and software, as well as strengthen distributor and
    consumer protections for digital goods.
  • Mexico would raise its de minimis shipment value
    level to $100 from the current $50. (A de minimis shipment value
    is the threshold at which a business has to pay duties on goods
    moving across the border and are subject to more stringent
    security checks.) Small US businesses or persons shipping goods
    worth $100 or less to Mexico would not be subject to tariffs and
    would face simpler customs checks.

Senior administration officials told reporters that the goal is
to send a formal notification of the renegotiation to Congress on
Friday, kicking off the clock for lawmakers to support or reject
the new deal.

The deal drew a mixed response, with lawmakers and experts
praising the preservation of many parts of NAFTA but also warning
that the agreement could be a step in the wrong direction.

I am working through the details of the possible US-Mexico
agreement, but there is reason to worry that this might be a step
backward from NAFTA for American families –especially on
fundamental issues of presumed expiration of the deal, and
empowering government bureaucrats rather than markets to
determine the components in cars and other goods,” GOP Sen. Ben
Sasse, a critic of Trump’s trade policy, said in a
statement.

Some conservative advocacy groups, such as American for
Prosperity and Freedom Partners, also took issue with the deal.

We’re encouraged by news that the White House is edging
closer to an agreement on NAFTA and look forward to getting more
specifics about this agreement soon,” AFP President Tim
Phillips and Freedom Partners Executive Vice President Nathan
Nascimento said in a joint statement. “The
devil is in the details, and we are concerned by reports that the
agreement may contain protectionist country-of-origin
requirements that create, rather than dismantle, barriers to free
trade.”

Canada is also facing a limited window to express concerns or
fight for changes in the new deal. Trump and some of his aides
argued that Canada could be excluded from the agreement if they
object to its terms.

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