US, Mexico, Canada finalise new trade deal

Mexico City

THE United States, Mexico and Canada signed a deal on Tuesday (Wednesday Singapore time) to finalise their new trade agreement, paving the way to ratification after more than two years of arduous negotiations.

However, the impeachment trial of President Donald Trump in the US Senate would likely delay Congressional ratification of the agreement until next year, said Senate Majority Leader Mitch McConnell.

In reality, it is the second time the three countries have triumphantly announced the conclusion of the United States-Mexico-Canada Agreement (USMCA), the deal meant to replace the 25-year-old Nafta, which Mr Trump complains has been "a disaster" for the US.

First signed in November 2018, USMCA got bogged down in political complications, particularly in the United States, where opposition Democrats questioned whether it would really force Mexico to deliver on labour reforms meant to level the playing field between Mexican and American workers.

But another year of talks produced a series of additions - notably including tougher enforcement of labour provisions - that won the blessing of House Speaker Nancy Pelosi, the key Democrat needed to move the agreement forward, as well as the largest US labor federation, the AFL-CIO.

Mexican President Andres Manuel Lopez Obrador, who presided over the signing ceremony, said the deal "will benefit both Mexican and American workers." He hailed it as a "driver of growth" for all three countries' economies.

"Some people thought it was impossible to reach this deal. Some people thought we wouldn't be able to agree on anything (with Trump). But look what we've done," said the leftist leader.

The final deal, which must now be ratified in all three countries' legislatures, will replace the 1994 North American Free Trade Agreement, the historic pact that erased nearly all tariffs across the region, deeply integrated its economies and helped turn Mexico into an export powerhouse.

Under Nafta, the region - which represents close to 30 per cent of the global economy and is home to nearly 500 million people - did US$1.2 trillion in trade last year.

But Mr Trump bashed Nafta as "the worst trade deal in the history of the country," blaming it for shipping American jobs south of the border.

He insisted on overhauling it - a long, fraught process that kicked off in August 2017, and which produced what Mr Trump swaggeringly tweeted "will be the best and most important trade deal ever made by the USA." Analysts say USMCA is similar to Nafta in many respects, but there is improved access for US agricultural goods, including dairy products, which Canada in particular had tried to limit.

It includes rules designed to improve US auto workers' competitiveness, requiring 40 percent of each duty-free car to be made by people earning at least US$16 an hour.

Besides labour enforcement rules, the additions signed on Tuesday include tougher measures to monitor environmental provisions, and remove the requirement for the countries to provide at least 10 years of exclusivity for biologic drugs, which blocks cheaper generic versions.

US Trade Representative Robert Lighthizer signed the annex to the deal in Mexico City along with Canadian Deputy Prime Minister Chrystia Freeland and Mexico's top negotiator on the accord, Jesus Seade. Senior Trump adviser Jared Kushner, the president's son-in-law, also attended.

"It's nothing short of a miracle that we have all come together," Mr Lighthizer said.

"We have accomplished this together at a moment when around the world it is increasingly difficult to get trade deals done," said Ms Freeland.

The path to ratification now looks clear in all three countries.

Ms Pelosi - acutely aware of the need to win back blue-collar voters the Democrats lost to Mr Trump in 2016 - sought to claim victory over the president by calling the final deal "infinitely better than what was initially proposed by the administration." USMCA's fate had looked precarious in recent weeks.

Mr Lopez Obrador firmly rejected the initial US proposal for labour inspections, and the deal seemed likely to get mixed up in Mr Trump's impeachment drama and 2020 re-election bid.

Mexico emphasised that there would be no American "inspectors" visiting Mexican factories or businesses, but rather panels of "independent labour experts" which Mexico would help to choose. AFP