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Trump explains new North American trade deal

President Trump, outgoing Mexican President Enrique Peña Nieto and Canadian Prime Minister Justin Trudeau signed a new trade deal to replace NAFTA, in an agreement that the US leader touted as a huge win for the US economy.

Posted: Dec 1, 2018 1:32 PM
Updated: Dec 1, 2018 1:49 PM

US President Donald Trump and his Canadian and Mexican counterparts signed a replacement NAFTA deal on Friday during a ceremony on the sidelines of the G20 summit.

The ceremonial signing does not mean the United States-Mexico-Canada Agreement -- the USMCA, as it has been rebranded -- will now go into effect. The deal still needs to win congressional approval in Washington, where key members of both political parties have already expressed significant concerns.

"I don't expect to have much of a problem," Trump said during the ceremony.

Top US officials were on hand for the signing, including Secretary of State Mike Pompeo, Treasury Secretary Steven Mnuchin, national security adviser John Bolton and the President's daughter Ivanka Trump and son-in-law Jared Kushner.

The signing ceremony in and of itself represented a political victory for Trump, who has been eager to mark the deal with a formal photo opportunity alongside Canadian Prime Minister Justin Trudeau and outgoing Mexican President Enrique Peña Nieto. It was not clear until just a day earlier that the ceremony would go through amid ongoing Canadian protests over US-imposed steel and aluminum tariffs.

"We need to keep working to remove the tariffs on steel and aluminum between our countries," Trudeau said, standing next to Trump at the ceremony.

"With hard work, goodwill, and determination, I'm confident we will get there. Our shared interests, prosperity and security demand it," he added.

Trump imposed the duties earlier this year to protect US producers, claiming it is in the US national security to protect those domestic industries. He can decide to lift them without making changes to the USMCA.

The new trade pact was precipitated by Trump's decision to get rid of the original NAFTA, which he's called the "worst trade deal" ever signed. Negotiators from all three countries began talks on updating it more than a year ago.

On Friday, Trump hailed the deal as a boon for the economies of all three countries.

"In the US, the new trade pact will support high-paying manufacturing jobs and promote greater access for American exports across the range of sectors including our farming, manufacturing and service industries," Trump said.

The USMCA differs from the 1993 NAFTA in several ways, and includes a brand-new chapter on digital trade. One of the most notable changes has to do with the way cars and trucks are manufactured. For a vehicle to be free from tariffs, more of its parts will have to be made in North America and by workers earning at least $16 an hour.

Trump said he expects the new deal to stop jobs from moving overseas and bring back jobs lost under the original NAFTA. But some lawmakers from both parties are skeptical.

Sen. Pat Toomey, a Republican from Pennsylvania, has argued that the new requirements for auto production actually restrict trade and that the administration should lift the tariffs on steel and aluminum.

In an interview this week with Bloomberg, Toomey said that the USMCA is "frankly, not really as good as the underlying NAFTA." But he said he could support it with a "few tweaks that move it in the direction of a more pro-trade agreement."

Congress can suggest small changes to be made to the legislation without sending the three parties back to the negotiating table.

But other changes might not be so easy. Some Republicans have come out strongly against a labor provision that aims to protect workers from sex-based discrimination. More than 40 GOP members signed a letter sent to Trump earlier this month, urging him not to sign the USMCA with this language in it, They argued that it threatens the country's authority to decide how to tackle civil rights.

The administration will need Democratic support too, as the party takes control of the House next year. White House officials have expressed optimism that the new wage requirement, as well as a provision addressing Mexican workers' rights would bring Democrats on board.

But some senior Democratic leaders have expressed concern that those new provisions aren't enforceable, including Massachusetts Democratic Rep. Richard Neal, who's set to take over the House Ways and Means Committee next year. He has said that "the bar for supporting a new NAFTA will be high."

This week, Democratic Massachusetts Sen. Elizabeth Warren officially announced she would be voting against the deal.

"As it's currently written, Trump's deal won't stop the serious and ongoing harm NAFTA causes for American workers. It won't stop outsourcing, it won't raise wages, and it won't create jobs," Warren said.

Strengthening the enforcement language is something that could be achieved by tweaking the legislation without going back to the negotiating table.

US labor groups have also withheld support so far over the enforceability of the new standards.

Rep. Nancy Pelosi, who Democrats have nominated for House speaker next year, called the deal a "work in progress" on Friday. She said it isn't something Democrats "can say yes or no to" just yet.

Congress is likely to wait to vote on the deal until the United States International Trade Commission releases a report on the economic impact. The commission has 105 days after the signing, or until mid-March, to deliver its report to Congress.

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