Free Trade NAFTA turns into USMCA

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HOUSTON (FOX 26) - The North American Free Trade Agreement, NAFTA has been replaced by the new U.S. Mexico Canada Agreement USMCA.

This week's panel: Jessica Colon - Republican strategist, Nyanza Moore - progressive commentator and Houston attorney, Bob Price – Associate Editor Breitbart Texas, Tony Diaz- Chicano educator and activist, Tomaro Bell – Super Neighborhood leader, Bill King - businessman, columnist and former Kemah Mayor.

WASHINGTON (AP) - President Donald Trump hailed his revamped North American trade agreement with Canada and Mexico as a breakthrough for U.S. workers on Monday, vowing to sign it by late November. But it still faces a lengthy path to congressional approval after serving for two decades as a political football for American manufacturing woes.

Embracing the U.S.-Mexico-Canada Agreement, which the Canadians joined just before a Sunday midnight deadline, Trump branded it the "USMCA," a moniker he said would replace the 24-year-old North American Free Trade Agreement, or NAFTA. With a satisfied smile, the president said the new name had a "good ring to it," repeating U-S-M-C-A several times.

But he noted that the agreement would need to be ratified by Congress, a step that could be affected by the outcome of the fall elections as Democrats seek to regain majorities in the House and Senate. When a reporter suggested he seemed confident of approval after his announcement, he said he was "not at all confident" - but not because of the deal's merits or defects.

"Anything you submit to Congress is trouble, no matter what," Trump said, predicting that Democrats would say, "Trump likes it so we're not going to approve it."

Canadian Prime Minister Justin Trudeau said Monday that his country was in a more stable place now that it had completed the negotiations. He said the deal needed to be fair since one trading partner was 10 times larger. He said Canada did not simply accept "any deal."

"We got the right deal. We got a win-win-win for all three countries," Trudeau said.

Likewise, outgoing Mexican President Enrique Pena Nieto said via Twitter that the deal negotiated over the past 13 months "achieves what we proposed at the beginning: a win-win-win agreement."

Despite Trump's jibe at the Democrats, their comments on the agreement were largely muted, though many lawmakers said the way the provisions of the deal are enforced would be critical.

"As someone who voted against NAFTA and opposed it for many years, I knew it needed fixing. The president deserves praise for taking large steps to improve it," said Senate Democratic leader Chuck Schumer of New York. He said any final agreement "must be judged on how it benefits and protects middle class families and the working people in our country."

Vermont Sen. Bernie Sanders, an independent who sought the 2016 Democratic presidential nomination, said that while the plan included "some improvements that could be good for U.S. workers, it lacks enforcement mechanisms that are necessary for these policies to succeed."

Trump, for his part, said the accord would return the United States to a "manufacturing powerhouse."

In fact, the U.S. has always been a manufacturing powerhouse and by some projections - made before he took office - is expected to be No. 1 in 2020.

The new agreement was forged just before a midnight deadline imposed by the U.S. to include Canada in a deal reached with Mexico late in the summer. It replaces NAFTA, which Trump has lambasted as a job-wrecking disaster that has hollowed out the nation's industrialized base.

NAFTA has long been a lightning rod for criticism among labor unions and manufacturing workers since it was being negotiated in the early 1990s during President George H.W. Bush's administration and later implemented by President Bill Clinton.

During the 1992 presidential campaign, independent candidate Ross Perot famously predicted a "giant sucking sound" as NAFTA pulled U.S. factory jobs into Mexico.

The new version would give U.S. farmers greater access to the Canadian dairy market. But it would keep the former North American Free Trade Agreement dispute-resolution process that the U.S. wanted to jettison. It offers Canada protection if Trump goes ahead with plans to impose tariffs on cars, trucks and auto parts imported into the United States.

NAFTA reduced most trade barriers in North America, leading to a surge in trade between the three countries. But Trump and other critics said it encouraged manufacturers to move south of the border to take advantage of low-wage Mexican wages.

The new pact will require regional content of 75 percent for automobiles, and also that 40 to 45 percent of vehicles coming to the U.S. be produced in plants paying at least $16 per hour. Mexico's incoming foreign relations secretary, Marcelo Ebrard, said some new regulations may pose challenges for companies to adapt to. However, he also said that "finishing this process of renegotiation provides certainty for financial markets, investment and job creation in our country."

In all, Trump said, the pact covers $1.2 trillion in trade.

For Trump, the agreement offered vindication for his hardline trade policies that have roiled relations with China, the European Union and America's North American neighbors while causing concerns among Midwest farmers and manufacturers worried about retaliation. Trump's advisers view the trade pact as a political winner in battleground states critical to the president's 2016 victory and home to tens of thousands of auto workers and manufacturers who could benefit from the changes.

Trump said he would sign the final agreement in late November, in about 60 days, and the pact is expected to be signed by Trudeau and by Mexico's Pena Nieto who leaves office Dec. 1. Trump said he spoke to Trudeau by phone and that their recent tensions didn't affect the deal-making. "He's a professional. I'm a professional," Trump said, calling it a "fair deal."

Canada, the United States' No. 2 trading partner, is by far the No. 1 destination for U.S. exports, and the U.S. market accounts for 75 percent of what Canada sells abroad.

But the president said his administration had not yet agreed to lift tariffs on steel and aluminum imports from Canada, a contentious issue between the two neighbors.

Trump has used U.S. tariffs on billions of dollars' worth of imported goods from China and other nations as a negotiating tactic and said the North American deal offered evidence that his approach was working. "Without tariffs, we wouldn't be standing here," he said.

The future of the agreement has also been a major issue in Mexico, where Pena Nieto will be replaced by President-elect Andres Manuel Lopez Obrador in December. Uncertainty over the fate of NAFTA talks had threatened to batter Mexico's currency and economic outlook.

Ratifying the deal is likely to stretch into 2019 because once Trump and the leaders from Canada and Mexico sign the agreement, the administration and congressional leaders will need to write legislation to implement the deal and win passage in Congress.

"The bar for supporting a new NAFTA will be high. NAFTA has had many critics over the years and its flaws are well-known," said Rep. Richard Neal, D-Mass. "Like me, many of my colleagues did not support the deal originally. And those who did will have serious questions that they need answered before doing so again."

WASHINGTON (AP) - President Donald Trump inaccurately described his new trade deal with Canada and Mexico as the biggest ever - it's not even close - and glossed over some possible consequences of the agreement, such as higher car prices.

Here's a sampling of his expansive statements on the deal Monday and the complexities behind them:

TRUMP: "The agreement will govern nearly $1.2 trillion in trade, which makes it the biggest trade deal in the United States' history."

THE FACTS: That's wrong, simply by virtue of the number of trade partners involved.

The proposed new agreement, replacing the North American Free Trade agreement, covers the same three countries. The Trans-Pacific Partnership, negotiated by the Obama administration, included the three NAFTA partners - United States, Canada and Mexico - plus Japan and eight other Pacific Rim countries. Trump withdrew the United States from the pact on his third day in office.

Even the Pacific deal pales in comparison with one that did go into effect with the U.S. on board - the Uruguay Round. Concluded in 1994, the round of negotiations created the World Trade Organization and was signed by 123 countries. The Federal Reserve Bank of Boston found the following year that the WTO's initial membership accounted for more than 90 percent of global economic output.

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TRUMP: "This deal will also impose new standards requiring at least 75 percent of every automobile to be made in North America in order to qualify for the privilege of free access to our markets."

THE FACTS: That's true. But as with any such requirement, it could make autos more expensive by discouraging the use of cheaper components from overseas. The same could be true of another provision, requiring at least 40 percent of a car's content to be built where workers earn $16 an hour. The new United States-Mexico-Canada Agreement indeed contains greater worker protections, a tradeoff that could mean higher costs.

The pact, if approved by Congress, will raise the percentage of a car's content that must be built within the trade bloc to 75 percent from 62.5 percent if it is to qualify for duty-free status.

Similarly, the deal would give pharmaceutical companies that make biologics -ultra-expensive drugs produced in living cells - 10 years of protection from generic competition, two more years than the Obama administration had negotiated under the Pacific deal. That also comes with the possible tradeoff of higher costs for users of the drugs.

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TRUMP, on overcoming the major hitch with Canada: "Dairy was a deal-breaker. And now for our farmers it's, as you know, substantially opened up much more. And I know they can't open it completely. They have farmers also. You know, they can't be overrun. And I fully - and I tell them that. I say, 'Look, I understand you have limits.' But they could do much better."

THE FACTS: That's a fair reading of one of the agreement's most significant changes - though dairy only accounts for about 0.1 percent of U.S.-Canada trade. Canada's tariffs on dairy imports can approach 300 percent. U.S. dairy farmers have also complained about Canadian policies that priced the U.S. out of the market for some dairy powders and allowed Canada to flood world markets with its own versions.

The new agreement would end the discriminatory pricing and restrict Canadian exports of dairy powders. Still, it's in some respects an incremental advance from the Pacific deal that Trump walked away from. It would expand U.S. access to up to 3.75 percent of the Canadian dairy market, versus 3.25 percent in the Trans-Pacific Partnership. Above that level, U.S. dairy farmers will still face Canada's punishing tariffs.

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TRUMP: "As one primary aspect, it will transform North America back into a manufacturing powerhouse."

THE FACTS: North America already is a manufacturing powerhouse. The United States ranks No. 2 in the world behind China in manufacturing output. Mexico ranks 11th and Canada 13th, according to United Nations numbers pulled together by the Brookings Institution.

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TRUMP: "I think my biggest concession was making the deal, because we could have done it a different way. But it would have been nasty, and it wouldn't have been nice, and I don't want to have that."

THE FACTS: Other concessions were made, as is typically the case in trade agreements.

For one, the "supply management" system Canada uses to protect its farmers would remain largely intact. For another, 2.6 million passenger vehicles from Canada and Mexico each would be exempt from tariffs of up to 25 percent that he has been threatening to impose on imported cars, trucks and auto parts. And Canada prevailed in insisting that a NAFTA dispute-resolution process be retained. The U.S. wanted to get rid of it.

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Find AP Fact Checks at http://apne.ws/2kbx8bd