KUNM

Trump Announces Tentative Deal With Mexico On Revised NAFTA

Aug 27, 2018
Originally published on August 27, 2018 10:06 am
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DAVID GREENE, HOST:

President Trump has long made his opinion known on the North American Free Trade Agreement with Canada and Mexico. Here he is last year in Phoenix.

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PRESIDENT DONALD TRUMP: Personally I don't think we can make a deal because we have been so badly taken advantage of. They have made such great deals, both of the countries but in particular Mexico, that I don't think we can make a deal. So I think we'll end up probably terminating NAFTA at some point, OK? Probably.

GREENE: Well, now it sounds like NAFTA may have a future. Today the White House announced that the United States has reached a tentative deal with Mexico on an updated version of NAFTA which the president is now calling the United States-Mexico Trade Agreement. Negotiators from the two countries have been holed up for weeks trying to hammer out a deal with Canada sitting on the sidelines. The president is announcing this handshake agreement with Mexico in the Oval Office this morning.

And NPR's Scott Horsley joins us from the White House. Hi there, Scott.

SCOTT HORSLEY, BYLINE: Good to be with you, David.

GREENE: Good to have you. So I thought this was the worst deal ever made, according to President Trump. What has changed this?

HORSLEY: Well, we're still waiting to find out a lot of the details. But one big push from the Trump administration has to do with cars and trucks. Right now vehicles produced anywhere in North America can be sold in the U.S. duty-free if they have just two-thirds or a little less than two-thirds North American content. Trump wants to boost that to 75 percent. And he also wants to require that a big chunk of the vehicles be made in high-wage factories, so likely the U.S. and Canada.

Mexico is apparently willing to go along with that. This could lead to more production in this country, but it's not clear. Right now, cars imported from outside North America face a relatively low tariff unlike trucks, which face a big, stiff tariff. So if this new agreement were to drive up the cost of North American production, it could put domestic manufacturers at a competitive disadvantage. So we shall see. Of course Trump has threatened to impose a much stiffer tariff on imported cars, so it's kind of a moving target.

GREENE: OK, so nothing certain yet, although one thing that seems certain is NAFTA has always been a three-way deal. Canada not at the table during this round of talks. They've even been cut out of the new name that Trump wants, the U.S.-Mexico trade deal. So what happens to our northern neighbor?

HORSLEY: Well, Trump said he still wants to include Canada, but they've not been taking part. They have been monitoring these talks. The idea was if the U.S. and Mexico could get their deal worked out, then maybe Canada would rejoin the negotiations. Interestingly, though, Canada's foreign minister is off in Europe this week and doesn't seem to be any - be in any rush to come back to Washington.

You know, Mexico has approached these talks in sort of a different way. They take seriously President Trump's threat to pull out of NAFTA, and they are worried about being left with no trade deal with the United States. So they're kind of willing to negotiate. Canada takes that threat less seriously. They would just as soon stick with the existing NAFTA. And they think that's a possibility.

GREENE: So what are the remaining sticking points here?

HORSLEY: One bone of contention has been the U.S. insistence on a sunset provision that would end the deal every five years unless it was explicitly renewed. Canada and Mexico don't like that. A lot of Trump's Republican allies don't like that. It's not clear whether the U.S. dropped that demand or Mexico conceded. Another of course sticking point has been carveouts in NAFTA for Canadian dairy, for example. So those could be bones of contention as well.

GREENE: So if indeed this is an agreement that the president is announcing today that's going to go forward, I mean, is there a sense for the timing and when it could actually be a real thing?

HORSLEY: He's calling this an understanding. So we'll see how long it takes to reduce it to writing. It - there has been a push to get a deal done before the new Mexican president is sworn in on December 1. It seems unlikely they can meet that target because any deal has to be vetted by the U.S. Congress, and that takes time. More likely the new agreement will be signed by a new Mexican president and also perhaps ratified by a new American Congress. And depending on what happens in November, that new Congress could look different than the House and Senate we have right now.

GREENE: All right, NPR's White House correspondent Scott Horsley from the White House - Scott, thanks.

HORSLEY: Good to be with you, David. Transcript provided by NPR, Copyright NPR.