The United States and Mexico have reached an agreement to change parts of NAFTA, the trade deal that President Donald Trump has derided for years as unfair.
Trump announced the agreement from the Oval Office Monday, with Mexican President Enrique Peña Nieto dialed in on a conference call.
But the deal left open the question of whether Canada, the third country in NAFTA, would agree to the changes — and Trump himself said he wanted to throw out the name NAFTA altogether.
“They used to call it NAFTA,” Trump said. “We’re going to call it the United States-Mexico trade agreement. We’re going to get rid of NAFTA because it has a bad connotation.”
US Trade Representative Robert Lighthizer said the agreement was “absolutely terrific” and would modernize a trade deal that had “gotten seriously out of whack.” He said he hoped Congress would approve it with broad bipartisan support.
On a separate call with reporters, Lighthizer highlighted some big changes that negotiators from both countries agreed to.
Auto manufacturing: The new deal would require that 75% of the parts in any car sold in North America be produced in the United States or Mexico. Currently, about 62% of parts are required to be produced in the United States, Mexico or Canada.
Higher labor standards: The new deal would require that 40% to 45% of auto parts in cars sold be made by workers earning at least $16 USD per hour.
Sunset clause: The agreement will last for 16 years, and will be reviewed every six years.
Much of the business world has been worried about Trump’s trade policies, and the stock market reacted positively to the news of a deal. The Dow closed nearly 260 points higher on Monday.
The agreement between the two countries could restart negotiations on NAFTA with all three parties — the United States, Mexico and Canada.
Oh, by the way Mexico, this movie was released 25 years ago today (August 27, 1993). You may want to pay attention to the lessons presented…