WASHINGTON (AP) — The Trump administration and Mexico have reached a preliminary accord to end the North American Free Trade Agreement and replace it with a deal that the administration wants to be more favorable to the United States.
President Donald Trump, in announcing the tentative agreement Monday at the White House, said a new deal would be called "the United States-Mexico Trade Agreement. Trump has frequently condemned the 24-year-old NAFTA trade pact as a job-killing "disaster" for the United States.
Iowa's junior U.S. Senator Joni Ernst issued the following statement on the trade deal: “Mexico, Canada and the United States make up one of the most competitive and successful regional economic platforms in the world. Saddled with low commodity prices and escalating trade disputes, today’s announcement that the United States and Mexico have reached a two-way deal on trade is huge news for Iowa’s farmers and ranchers, and is a monumental step to help restore both market certainty and confidence across rural America.
“While I am still reviewing the deal, the President’s fulfillment of a core promise to revamp trade deals brings more certainty to our markets, more money in our pockets, and more confidence to Iowa – and American – farmers, ranchers and manufacturers.”
Any new agreement is far from final. The administration still needs to negotiate with the third partner in NAFTA, Canada, to become part of any new trade accord. Without Canada, America's No. 2 trading partner, it's unclear whether any new U.S. trade agreement with Mexico would be possible.
The president said that he will be calling Canadian Prime Minister Justin Trudeau.
"If they'd like to negotiate fairly, we'll do that," Trump said.
Trump put pressure on Canada by threatening to tax Canadian auto imports and to leave Canada out of a new regional trade bloc.
NAFTA reduced most trade barriers between the three countries. But Trump and other critics say it encouraged U.S. manufacturers to move south of the border to exploit low-wage Mexican labor.
Iowa Governor Kim Reynolds had this to say about the announced deal: “I am encouraged by the announcement today from the White House that a preliminary trade agreement has been reached with Mexico. I look forward to seeing the final agreement. I believe today’s announcement is a step in the right direction to bring certainty to the business and farming communities. I am hopeful this agreement with Mexico will prompt Canada to rejoin negotiations.
“Iowa farmers want free trade and open markets. As trade negotiations proceed, Iowa farmers will continue to do what they do best – produce. Our farmers are the most productive in the world and will always win when they have unrestricted access to markets. We are proud of our state’s ability to feed and fuel the world. I will continue to work tirelessly to make sure their voices are heard.
“On behalf of Iowa farmers and businesses, I want to thank the president and his administration for taking the necessary steps to reach a deal with Mexico.”
Talks to overhaul the agreement began a year ago and have proved contentious.
U.S. and Mexican negotiators worked over the weekend to narrow their differences. The Office of the U.S. Trade Representative said Monday that Mexico had agreed to ensure that 75 percent of automotive content be produced within the trade bloc (up from a current 62.5 percent) to receive duty-free benefits and that 40 percent to 45 percent be made by workers earning at least $16 an hour.
It remain unclear where Monday's announcement leaves Canada.
Adam Austen, a spokesman for Canadian Foreign Minister Chrystia Freeland, said: "Canada is encouraged by the continued optimism shown by our negotiating partners. Progress between Mexico and the United States is a necessary requirement for any renewed NAFTA agreement."
Austen said the Canadians had been regular contact with the NAFTA negotiators.
"We will only sign a new NAFTA that is good for Canada and good for the middle class," he said, adding that "Canada's signature is required."
The No. 2 Senate Republican, John Cornyn of Texas, hailed the "positive step" but said Canada needs to be party to a final deal. "A trilateral agreement is the best path forward," he said, adding that millions of jobs are at stake.