Trump Replaces NAFTA with USMCA

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US President Donald Trump has formally signed a new trade pact with Mexico and Canada. It brings his campaign promise to replace the three countries’ existing deal closer to fruition.

The US Mexico Canada Agreement (USMCA) will replace the 1994 North American Free Trade Agreement (Nafta).

Mr Trump has described Nafta as America’s “worst” deal and blamed it for a decline in manufacturing jobs.

Canada has yet to ratify the pact and will do it in the nearest future.

The three countries announced they had reached a deal in 2018 after more than a year of negotiation. The accord has been working its way through the legislatures of the three countries ever since.

In the US, Democrats, who control the House of Representatives, insisted on changes Рincluding stronger labour rules Рbefore voting in support of the measure. They approved revisions late last year.

Trump: From Nafta to a New Agreement

Many of the original Nafta provisions will continue under the new accord; it governs more than $1tr in annual trade between the three countries. It also sets new terms for digital trade and increases US access to Canada’s dairy market.

The most eye-catching changes concern new rules for car companies with the purpose of boosting production in the US.

The new deal requires a higher percentage of vehicles manufactured in North America to qualify for tariff-free treatment. It also requires hiring workers who make at least $16 an hour for certain percentage of each vehicle.

The US will provide more than $27m in grants to Mexico to help enforce labour laws and address issues such as child workers in the agricultural sector, the Department of Labour announced.

At a White House signing ceremony on Wednesday, that excluded democrats, Mr Trump said the new deal was a “massive win” that would end the Nafta “nightmare”.

He also thanked Republican senators for their role – joking that his compliments may be due to his interest in their support at his ongoing impeachment trial.

“Maybe I’m just being nice because I want their vote,” he said.