Donald Trump, the US president, signed the implementing legislation for the USMCA, a trade deal with Canada and Mexico to replace Nafta that was agreed after three years of testy negotiations with the North American neighbours and Democrats on Capitol Hill.
Mr Trump signed the law at a White House ceremony on Wednesday, touting it as a major accomplishment on his economic agenda that eventually garnered bipartisan support in Congress. The deal, however, will not take effect until Canada’s parliament ratifies the deal, in a process that is likely to involve potentially lengthy negotiations between Justin Trudeau’s government and opposition lawmakers.
The USMCA updates the 1994 Nafta pact, which Mr Trump had heavily criticised for driving US jobs to Mexico, with a new digital chapter and other changes in line with the Trans-Pacific Partnership agreement negotiated by Barack Obama. Mr Trump withdrew the US from the TPP before it took effect.
The USMCA also includes new strict content and wage rules for the automotive sector to encourage more production in the US, demands that Mexico enforce tighter labour standards, and removes the ability of multinationals to seek compensation for discriminatory treatment through independent panels, except in a few sectors.
The renegotiated Nafta was heavily backed by US business groups, mainly because it removed the threat that Mr Trump could pull the US out of the original Nafta entirely, which would have delivered a huge hit to integrated supply chains across the North American continent.
Mr Trump’s signature of the USMCA legislation comes as he is trying to show some results out of his disruptive trade policies as he heads into the 2020 re-election campaign.
Earlier this month, Mr Trump hit the brakes on his trade war with China by agreeing to a “phase one” deal with Beijing that includes pledges for large Chinese purchases of US goods and services, coupled with some written commitments by Beijing in areas like currency, financial services, and intellectual property. The US, meanwhile, agreed to roll back a small amount of tariffs on Chinese goods. Mr Trump has said he hopes to tackle some of the thornier issues in the US-China relationship at a second stage.
In a sign of the very tense political environment in Washington amid the impeachment trial against Mr Trump, the White House declined to invite any Democrats to the USMCA ceremony, even though Democratic support was critical in ensuring its passage.
“When the Trump Administration sent the original USMCA to the House, it was dead on arrival. Only due to Democrats’ tough negotiations did the deal become viable,” said Richard Neal, the Democratic chairman of the House Ways and Means committee.
Source: Economy - ft.com
