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Trump hails 'wonderful and historic' trade deal with Canada and Mexico - business live Trump hails 'biggest ever' trade deal with Canada and Mexico - business live
(35 minutes later)
Trump says he plans to sign the new trade deal with Canada and Mexico by the end of November. pic.twitter.com/RUkno6HnZJ
Getting into his stride, Trump now hits at the “babies” who claim that tariffs don’t make a difference.
We wouldn’t be standing here without tariffs, he argues.
He adds that other countries such as India have been on the phone to the White House trying to renegotiate trade deals, because they’re scared that the US will hit them with tariffs.
It’s so weird how, even during what some might consider a win, Trump name calls: “babies” complaining about tariffs. pic.twitter.com/QdHLmxXoLd
Once USMCA is approved, it will be a new dawn for the US auto industry and the US auto worker, continues Trump.
It will make North America a “manufacturing powerhouse”, he promises.
But he also points out that the deal hasn’t been approved by Congress, suggesting that some on Capitol Hill might oppose the deal “just because Trump likes it”.
No Trump speech is complete, it seems, without an attack on some of America’s trading partners.
And today, he turns his guns on Europe, saying it’s a privilege for them to sell goods to America.
Ditto Japan, Trump continues.. saying it’s a privilege for them to “attack the US piggy bank”.
Onto the details...
Trump says USMCA is the most modern, up-to-date and balanced trade agreement ever, with the “most advanced protections ever for workers”.
It will help US farmers and ranchers export wheat, poultry, eggs and dairy products to Mexico and Canada.
The president also singles out the provision that higher-paid workers produce a proportion of cars n the region, and the new protection for intellectual property.
Trump then thanks a string of top officials for their work on USMCA, singling out US trade representative Robert Lighthizer for special praise.
Whenever you called Lighthizer, you’d find him working in his office or another office, says Trump, hailing his work ethic.
He also says Mexico’s outgoing president Enrique Peña Nieto should get credit, calling him a “terrific person”.
Justin Trudeau got a great deal for Canada, Trump adds graciously.
Donald Trump begins by saying it’s a beautiful, beautiful day in Washington.... and a day in which he brings “truly historic news for our nation, and the world.”
We have successfully completed negotiations on a brand new deal to terminate and and replace Nafta with an incredible new deal with Canada and Mexico, called USMCA, Trump says proudly.
USMCA has a good ring to it, he muses.
The president then lays into Nafta, calling it the “worst trade deal ever made”, which cost America one in four auto jobs.
USMCA, Trump continues, is the biggest trade deal in US history....
Trump: "The agreement will govern nearly $1.2 trillion in trade, which makes it the biggest trade deal in United States history."
Donald Trump has arrived at the podium at the White House Rose Garden to speak about the USMCA trade deal, and presumably take a victory lap....
In the Rose Garden, waiting for President Trump’s press conference on the new #Nafta deal pic.twitter.com/j7B5ESkjXHIn the Rose Garden, waiting for President Trump’s press conference on the new #Nafta deal pic.twitter.com/j7B5ESkjXH
There’s a good round-up of the key differences between Nafta and USMCA here in the Washington Post, by Heather Long.There’s a good round-up of the key differences between Nafta and USMCA here in the Washington Post, by Heather Long.
Here’s a quick summary:Here’s a quick summary:
New name. Goodbye NAFTA. The new deal will be known as the United States-Mexico-Canada Agreement, or USMCANew name. Goodbye NAFTA. The new deal will be known as the United States-Mexico-Canada Agreement, or USMCA
Big changes for cars. More cars and truck parts should be made in North America.Big changes for cars. More cars and truck parts should be made in North America.
WashPo says:WashPo says:
Starting in 2020, to qualify for zero tariffs, a car or truck must have 75 percent of its components manufactured in Canada, Mexico or the United States, a substantial boost from the current 62.5 percent requirement.Starting in 2020, to qualify for zero tariffs, a car or truck must have 75 percent of its components manufactured in Canada, Mexico or the United States, a substantial boost from the current 62.5 percent requirement.
There’s also a new rule that a significant percentage of the work done on the car must be completed by workers earning at least $16 an hour, or about three times what the typical Mexican autoworker makes.There’s also a new rule that a significant percentage of the work done on the car must be completed by workers earning at least $16 an hour, or about three times what the typical Mexican autoworker makes.
Trump’s victory: Canada opens up its milk market by giving a larger share to U.S. farmers and eliminating its Class 7 pricing scheme.Trump’s victory: Canada opens up its milk market by giving a larger share to U.S. farmers and eliminating its Class 7 pricing scheme.
That means U.S. dairy farmers can probably send a lot more milk protein concentrate, skim milk powder and infant formula to Canada (and those products are relatively easy to transport and store).That means U.S. dairy farmers can probably send a lot more milk protein concentrate, skim milk powder and infant formula to Canada (and those products are relatively easy to transport and store).
Canada’s victory: Chapter 19, allowing for a special dispute process, stays intact. Chapter 19 allows Canada, Mexico and the United States to challenge one another’s anti-dumping and countervailing duties in front of a panel of representatives from each country. This is generally a much easier process than trying to challenge a trade practice in a U.S. courtCanada’s victory: Chapter 19, allowing for a special dispute process, stays intact. Chapter 19 allows Canada, Mexico and the United States to challenge one another’s anti-dumping and countervailing duties in front of a panel of representatives from each country. This is generally a much easier process than trying to challenge a trade practice in a U.S. court
On cars, Mexico and Canada get assurance that Trump won’t pound them with auto tariffs. The US administration signed “side letters” allowing Canada and Mexico can continue sending about the same number of vehicles and parts across the border free of charge, regardless of whether auto tariffs go into effect down the road. Only parts above that quota could face tariffs. Trump’s steel tariffs stay in place (for now). Canada wanted Trump to stop his 25 percent tariffs on Canadian steel, but there’s no deal (yet)On cars, Mexico and Canada get assurance that Trump won’t pound them with auto tariffs. The US administration signed “side letters” allowing Canada and Mexico can continue sending about the same number of vehicles and parts across the border free of charge, regardless of whether auto tariffs go into effect down the road. Only parts above that quota could face tariffs. Trump’s steel tariffs stay in place (for now). Canada wanted Trump to stop his 25 percent tariffs on Canadian steel, but there’s no deal (yet)
Improved labor and environmental rights, particularly for Mexico....Improved labor and environmental rights, particularly for Mexico....
For example, the USMCA stipulates that Mexican trucks that cross the border into the United States must meet higher safety regulations and that Mexican workers must have more ability to organize and form unions.For example, the USMCA stipulates that Mexican trucks that cross the border into the United States must meet higher safety regulations and that Mexican workers must have more ability to organize and form unions.
Increased intellectual property protections. There are more-stringent protections for patents and trademarks, including for biotech, financial services and domain names - which weren’t considered when Nafta was created in the 1990s.Increased intellectual property protections. There are more-stringent protections for patents and trademarks, including for biotech, financial services and domain names - which weren’t considered when Nafta was created in the 1990s.
Chapter 11, giving investors a special way to fight government decisions, is (mostly) gone. That will please critics, who say it allowed investors to sue governments and win money off the taxpayer.Chapter 11, giving investors a special way to fight government decisions, is (mostly) gone. That will please critics, who say it allowed investors to sue governments and win money off the taxpayer.
Here’a your 1-minute cheatsheet on what is in #USMCA ...Trump won some issues and gave up some to Canada. But the deal got done and will be in effect by 2020. https://t.co/BYBpy9o0Q2 https://t.co/OPdOJlGbtlHere’a your 1-minute cheatsheet on what is in #USMCA ...Trump won some issues and gave up some to Canada. But the deal got done and will be in effect by 2020. https://t.co/BYBpy9o0Q2 https://t.co/OPdOJlGbtl
Duncan Weldon of Britain’s Resolution Group also sees a theme developing....Duncan Weldon of Britain’s Resolution Group also sees a theme developing....
NAFTA to USMCA is perhaps instructive.Trump shouts, he gets a nominal/cosmetic change, he declares victory and moves on.NAFTA to USMCA is perhaps instructive.Trump shouts, he gets a nominal/cosmetic change, he declares victory and moves on.
The New York stock market has opened higher, as Wall Street traders give USMCA the thumbs-up.The New York stock market has opened higher, as Wall Street traders give USMCA the thumbs-up.
The Dow Jones industrial average gained 150 points as the opening bell rang out.The Dow Jones industrial average gained 150 points as the opening bell rang out.
The broader S&P 500 index is also rattling higher...The broader S&P 500 index is also rattling higher...
Stocks open higher after US and Canada secure deal to replace NAFTA https://t.co/c1Ey26io2Z pic.twitter.com/06D5Gf2POWStocks open higher after US and Canada secure deal to replace NAFTA https://t.co/c1Ey26io2Z pic.twitter.com/06D5Gf2POW
If USMCA isn’t as ‘historic’ a change as president Trump claims, why has it been well-received in the markets?If USMCA isn’t as ‘historic’ a change as president Trump claims, why has it been well-received in the markets?
Well, economists will be relieved that the agreement maintains zero tariffs on swathes of goods between the three countries. That removes the risk of hefty new levies that would curb demand.Well, economists will be relieved that the agreement maintains zero tariffs on swathes of goods between the three countries. That removes the risk of hefty new levies that would curb demand.
But also, a pattern is emerging; the Trump White House demands major changes, gets some progress, declares a famous victory, and moves onto the next battle.But also, a pattern is emerging; the Trump White House demands major changes, gets some progress, declares a famous victory, and moves onto the next battle.
A similar result with, say, the Chinese trade talks would be welcomed by investors.....A similar result with, say, the Chinese trade talks would be welcomed by investors.....
Donald Trump is expected to speak about the USMCA deal at the White House at around 11am local time (4pm BST).Donald Trump is expected to speak about the USMCA deal at the White House at around 11am local time (4pm BST).
President Trump tweets he will make remarks on the new United States Mexico Canada Agreement, or USMCA, today at 11 a.m. ET at the White House. https://t.co/X9o3AjXlyKPresident Trump tweets he will make remarks on the new United States Mexico Canada Agreement, or USMCA, today at 11 a.m. ET at the White House. https://t.co/X9o3AjXlyK
The Financial Times have helpfully flagged up some of the differences between USMCA and Nafta.
They’re not dramatic, but together they represent an evolution from the previous trade deal created in the Clinton era.
For example, new “rules of origin” will force carmakers to use more parts from the region.
A new wages condition states that a minimum input must be added in factories that pay workers at least $16 an hour. That could move some work from Mexico back to America.
There’s also now a sunset clause – stating that USMCA will expire in 16 years (Nafta ran indefinitely).
The FT explains:
The Trump administration had long demanded such a “sunset” clause. Indeed, Washington had wanted the sunset clause period to last only five years, but was rebuffed by Canada and Mexico.
Plus (as explained earlier), we have the new access to Canada’s dairy industry (a win for America), and the retention of the Chapter 19 resolution facility (a win for Canada).
More here.
How is Trump’s USMCA different from Nafta? https://t.co/2TXkHMlUj2
Cailin Birch, senior commodities analyst at the Economist Intelligence Unit, also argues that USMCA isn’t all that different from Nafta:
She says:
“Although the details remain unclear, the broad agreement reached by the US and Canada on 30 September 30 fits with our forecast – namely, that a trilateral trade agreement would be agreed with a few changes around the margin, but that the structure of the agreement would not be fundamentally altered.
It is in all three countries’ interest that a trilateral agreement was reached - Canada and Mexico are critical export markets for US producers, and regional supply chains have become deeply intertwined since Nafta was first introduced in 1994. As a result, US businesses would have been heavily negatively affected by the dissolution of Nafta. Likewise, both Canada and Mexico will have greater bargaining power as part of a North America-wide agreement than they would have had in separate bilateral deals with the US.
The recent jump in both the Mexican peso and the Canadian dollar confirms that market fears are beginning to ease, as clarity improves over the future of North American trade policy.
However, the difficulty of the negotiations, and particularly the “divide and conquer” strategy employed by the Trump administration, is likely to weigh on North American diplomatic and political relations for the remainder of this administration.”
America’s tech sector hasn’t approved of Trump’s belligerence on trade matters in the past - particularly the tariffs imposed on China.
But today, the Information Technology Industry Council is all smiles.
ITI president and CEO Dean Garfield says USMCA is a welcome move – adding that it will build on Nafta, not just confine it to history.
Garfield says:
“Today’s trilateral agreement is a significant step toward creating a foundation for North America’s economic prosperity for years to come.
While we are still reviewing text, we’re encouraged this plan will build upon the prior economic success of Nafta and adapt it to the fundamentally digital economy in which we live through new rules on digital trade, intellectual property, and trade in goods.
We understand and appreciate that negotiators have taken their time to secure strong provisions in this agreement that will greatly advance digital trade in North America, enabling companies across industries to hire more workers, innovate more products and grow the economies in their communities.”
Political scientist Ian Bremmer argues that the USMCA deal is a genuine breakthrough, which could help president Trump force Beijing into a new trade deal too:
New NAFTA (USMCA) agreement is the best trade news from Trump Administration to date.
If Trump now announces US will restart negotiations for TPP...he will be well set up for success in tough negotiations with China.
European stock market have all rallied today, on relief that the Nafta trade deal is being updated, not abandoned.
Shares have risen in London, Frankfurt, Paris and beyond...paving the way for a rally on Wall Street in a few hours.
David Madden of City trading firm CMC Markets says:
European equity markets have been boosted by the news that the US and Canada have struck a trade deal.
The agreement between US and Canadian trade delegates was struck just hours before the midnight deadline, and President Trump will be delighted that he managed to replace the North American Free Trade Agreement.
The Mexican component of the deal was reached in August and now that the Canadian element has fallen into place, bullish sentiment is sweeping across global markets.
Warm words from the White House....
Congratulations to Mexico and Canada!
The head of the OECD thinktank, Angel Gurría, has also welcomed the “new, modernised” trade deal between the US, Mexico and Canada.
Secretary-general Gurría says:
“The OECD has long supported open markets for trade and investment as a crucial driver of economic growth and jobs.
“Today’s announcement supports strong growth and good jobs in all three countries; it will boost the confidence of firms and investors by preserving stable and predictable rules-based trade in North America.
It will make the region more productive and more competitive internationally.”
Just in: Donald Trump has tweeted that the new trade agreement with Canada is a “wonderful” and “historic” breakthrough.
He argues that it will help US farmers and manufacturers sell goods overseas (a reference to Canada opening up its dairy sector to more competition).
He adds that USMCA will help the US, Canada and Mexico compete with the rest of the world -- a reminder that Washington is still pushing Beijing to reform its trade practices too.
Late last night, our deadline, we reached a wonderful new Trade Deal with Canada, to be added into the deal already reached with Mexico. The new name will be The United States Mexico Canada Agreement, or USMCA. 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, reduces Trade Barriers to the U.S. and will bring all three Great Nations together in competition with the rest of the world. The USMCA is a historic transaction!
The US government has now released the details of the revamped trade deal, online here.
It begins by boldly declaring that America, Canada and Mexico have agreed to “strengthen anew” their “longstanding friendship” -- not that relations have been particularly chummy since Donald Trump became president.
The agreement then confirms that the three parties have agreed to “REPLACE” (their capitals) the 1994 North American Free Trade Agreement with.....
“...a 21st Century, high standard new agreement to support mutually beneficial trade leading to freer, fairer markets, and to robust economic growth in the region”.
That will allow Trump to declare that he has delivered on his pledge to reshape Nafta (presumably he’ll be awake and tweeting shortly...).
But what of the new free trade deal itself?
Wins for America include:
US farmers get greater access to Canada’s dairy market, through an increased quota on foreign imports. This may be slightly more generous than the quotas available to Asian countries under the Agreement for Trans-Pacific Partnership (TPP) deal.
Canada has agreed to eliminate two classes of milk, which had encouraged Canadians to buy domestic milk rather than from overseas. That should help US producers who want to sell more milk across the border (which explains why the Canadian dairy lobby aren’t happy)
Here's the key provision in USMCA that calls on Canada to end within 6 months of ratification its use of Milk Class 6 and 7. Big win for U.S. dairy. https://t.co/5R5k556jXW pic.twitter.com/qvruZf989b
Canada, meanwhile, will be pleased that:
The “Chapter 19 dispute-settlement mechanism”, created to resolve trade and anti-dumping disputes, remains untouched in the new agreement. Washington doesn’t like these dispute panels, and had pushed for Chapter 19 to be abolished.
On cars, the deal means there is no hard limit on Canadian auto exports to America. Canada has also been promised an exemption if Trump imposes new tariffs on this area.
Getting back to the US-Canada-Mexico trade deal....and Bloomberg’s Joe Nocera has written a interesting article explaining why America need to agree a new trade deal with Canada.
He points out that Canada is a massive trade partner for many US states, thanks to the elimination of tariffs under Nafta.
For example, Virginia exports $3bn of goods to Canada -- around one-fifth of the state’s total exports -- while importing $2bn.
So, even though Donald Trump has savaged the Nafta deal in the past, Washington couldn’t afford let it die without a replacement.
Nocera explains:
The media has been quick to label the deal with Canada – called the U.S.-Mexico-Canada Agreement, or USMCA – a “win” for Trump, but the truth is that for all his bluster, Nafta hasn’t been “renegotiated” so much as it’s been fiddled with on the margins.
The new Nafta – which Trump will no doubt praise – will be more or less the same as the old Nafta, which he has called “the worst trade deal in history.” Virginia will no doubt breathe a sigh of relief, as will businesses and labor unions and states across the country. They all understand that trade creates more jobs that it destroys, which is exactly what the Virginia example shows.