Agreement Between Trump And Peña Nieto On NAFTA

2024 Author: Steven Freeman | [email protected]. Last modified: 2023-12-17 08:15

President Donald Trump and his Mexican counterpart, Enrique Peña Nieto, announced on Monday a preliminary agreement between the two countries to reform the North American free trade agreement, which in the United States is known by the initials of NAFTA.

In a appearance before the media in the Oval Office to which the Mexican president joined by conference call, Trump assured that the changes that will be included in the treaty launched 24 years ago represent a "tremendous" achievement for US industry and agriculture..

He also hinted at the possibility of giving the treaty a new name, since he considers that NAFTA has "negative connotations", since he considers it "the worst trade agreement" in the history of the country and its revocation was a fundamental part of his campaign to the White House.

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Peña Nieto also congratulated himself on the agreement, which was reached within a few months of the end of his term, and offered to provide the announcement made with tequila after more than a year of negotiations. The scene, which had its comic moment when Trump initially failed to connect with the Mexican president, contrasts with the exchange of accusations that both leaders have carried out about, among other things, the famous border wall.

The White House tenant even seems to have started the relationship with Peña Nieto's successor in December, the leftist Andrés Manuel López Obrador, who is aware of the negotiations.

But before opening the bottles, let's see what the two countries have agreed to in this negotiation, in which Canada, the third NAFTA partner, has not participated. This is what is known so far, according to the press in both countries.

Automobiles

The new agreement contemplates raising from 62.5% to 75% the percentage that a car must be manufactured in one of the three member countries of the agreement so that it can be imported without paying tariffs. The measure seeks to force more of the parts each unit is manufactured to come from North America, rather than Asia or other countries that manufacture at a lower cost.

Also increasing to 40% to 45% is the percentage of each unit that must be manufactured with workers who earn a minimum of low-wage spending from countries outside of NAFTA.

Intellectual property

The two countries have also agreed to update the rules governing intellectual property rights and labor negotiations, largely to include industries such as digital that did not exist when it was signed in the early 1990s.

Expiration clause

Although Trump originally wanted the clause by which the treaty be reviewed every five years, with the possibility of abandoning it if an agreement was not reached, the pact reached with Mexico extends its validity for 16 years and will be reviewed every six years. years. With this, it is possible to give greater stability to the agreement and prevent one of the parties from backing off when it ceases to agree.

Uncertainty

The agreement announced today also clears some of the doubts that had left the markets on edge since President Trump came to the White House with the idea of unilaterally rescinding NAFTA if he failed to renegotiate it. That scenario, which would have shaken the economy of the three countries, will not happen for now.

That does not mean that all the clouds have been cleared, since Canada is not part of the agreement announced by Peña Nieto and Trump. In fact, northern neighbors have become the main target of the American president, who complained about Canadian dairy tariffs at today's appearance.

The question now is whether Canadian Prime Minister Justin Trudeau will join the tequila shot proposed by Peña Nieto and whether the Congress, which has the last word on this matter, will also join the party.