Trump says he's ditching NAFTA but that's not what's happening

Alicia Cross
August 28, 2018

On Monday morning, President Trump officially announced the end to NAFTA, the longtime Clinton era-trade agreement between the U.S., Mexico and Canada.

Regardless of Trump's claims of reaching an entirely new trade deal, the new agreement does seem to bring the three countries much closer to a potential NAFTA rewrite more than 25 years after it took effect.

In a tweet, Mexico's president Enrique Pena Nieto, acknowledged that he and Trump had spoke with one another and added that he wants Canada's "re-incorporation into talks to achieve a successful trilateral negotiation of NAFTA this week".

Both the U.S. president and the Mexican president, Enrique Peña Nieto, said they had an understanding and thanked each other during a phone call listened into by reporters.

The agreement between the two countries could restart negotiations on NAFTA with all three parties - the United States, Mexico and Canada. The delegation also included Jesús Seade, a World Trade Organization veteran tapped by Mexico's President-elect Andrés Manuel López Obrador as his future chief trade negotiator.

After nearly a year of negotiations between Canada, the US and Mexico to update the 24-year-old North American Free Trade Agreement, the latter two countries announced the framework of a deal on Monday, with Canada on the outside looking in - for now.

Adam Austen, a spokesman for Canadian Foreign Minister Chrystia Freeland, said: "Canada is encouraged by the continued optimism shown by our negotiating partners".

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Jesus Seade, the Nafta representative for Mexican president-elect Andres Manuel Lopez Obrador, has predicted that the nations will agree on a softened version of a so-called "sunset clause", an automatic expiration after five years - a key USA demand. "We're going to get rid of NAFTA because it has a bad connotation". The new preliminary agreement would increase that requirement.

The U.S. president also threatened America's northern neighbor with penalties if there is no agreement. But Prime Minister Justin Trudeau has insisted his government will only sign a deal that's good for Canada.

The administration's fact sheet about the deal described it as "modernizing NAFTA" and an "update to the 24-year-old NAFTA", a nod to the fact that numerous trade agreement's provisions remain in place.

After the announcement, Pena Nieto thanked Trump for his political will and participation in the deal, but asked that Canada also be included in the agreement.

Other key issues are Chapter 19 anti-dumping panels, which the United States wants to kill but which may be a deal-breaker for Canada, as well as Canada's protected dairy sector, which Trump is targeting to dismantle. He says it will mark the end of the NAFTA name. But a senior Administration official insisted that wasn't the case on a conference call with journalists.

The No. 2 Senate Republican, John Cornyn of Texas, hailed Monday's news as a "positive step" but said Canada needs to be party to a final deal. Canada will now need to rejoin talks - the US hadn't invited them for weeks - and sign off on the deal, as well as resolve its own irritants.

Trump has repeatedly indicated he would prefer to reach bilateral agreements with Canada and Mexico, but the two countries have maintained a united front that a trilateral agreement is the only one they will sign.

Other reports by Free-Prsite

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