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Trump hails 'wonderful and historic' trade deal with Canada and Mexico - business live Trump hails 'wonderful and historic' trade deal with Canada and Mexico - business live
(35 minutes later)
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 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/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.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.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.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.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).There’s also now a sunset clause – stating that USMCA will expire in 16 years (Nafta ran indefinitely).
The FT explains: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.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).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.More here.
How is Trump’s USMCA different from Nafta? https://t.co/2TXkHMlUj2How 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:Cailin Birch, senior commodities analyst at the Economist Intelligence Unit, also argues that USMCA isn’t all that different from Nafta:
She says: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.“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.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.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.”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.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.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.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:Garfield says:
“Today’s trilateral agreement is a significant step toward creating a foundation for North America’s economic prosperity for years to come.“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.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.”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: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.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.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.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.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: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.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 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.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....Warm words from the White House....
Congratulations to Mexico and Canada!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.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:Secretary-general Gurría says:
“The OECD has long supported open markets for trade and investment as a crucial driver of economic growth and jobs.“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.“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.”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.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 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.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......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!....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.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.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.....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”.“...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...).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?But what of the new free trade deal itself?
Wins for America include: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.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)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/qvruZf989bHere'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: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.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.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.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.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.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.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: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 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.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.