Play Live Radio
Next Up:
Available On Air Stations
KPBS Midday Edition

NAFTA Is Being Renamed US-Mexico Trade Agreement

President Trump goaded Attorney General Jeff Sessions on Friday, asking, if he's so committed to avoiding political interference, why doesn't he investigate Democrats and Trump's other enemies?
Evan Vucci AP
President Trump goaded Attorney General Jeff Sessions on Friday, asking, if he's so committed to avoiding political interference, why doesn't he investigate Democrats and Trump's other enemies?
NAFTA Is Being Renamed US-Mexico Trade Agreement
NAFTA Is Being Renamed US-Mexico Trade Agreement GUEST: Paola Avila, vice president of international business affairs, San Diego Regional Chamber of Commerce

Our top story on Midday edition. Stocks rose today on word that the U.S. and Mexico had reached a tentative agreement on a trade deal. President Trump with outgoing Mexican President Enrique Peña Nieto on the phone announced the new United States Mexico trade agreement. This is something that's very special for our manufacturers and for our farmers from both countries. For all of the people that work for jobs it's also a great trade and it makes it a much more fair Bill. Even with the new name the agreement is still based on NAFTA upgraded with new language on the digital economy and new requirements for auto manufacturing. But one big impediment still remains getting Canada to sign on. Joining me is Paula Avila vice president of the international business affairs for the San Diego Regional Chamber of Commerce. Paolo welcome to the show. Well thank you for having me. What do you see as the most significant difference between what was announced today and the old NAFTA agreement the absence of Canada for sure without Canada. It is not a trilateral agreement in that regard. It's a lesser agreement than what we have today. Why would a trade agreement just between the U.S. and Mexico be a lesser agreement because what makes us globally competitive is the trilateral trade bloc that we have created where we are producing together the three countries North America competing against Asia competing against any other global economic power. That is what makes us competitive is the unique trilateral agreement and coproduction that we have created. Did you see U.S. Mexico agreement the way it was announced today changing the way manufacturing is conducted on both sides of the U.S. Mexico border here in San Diego. I should caution by saying we don't have the full details of the agreement. So there is a lot left to be seen. One of the main changes though is the content for auto manufacturing increasing from 62 percent to 75 for the region. But that's the combined region. So we will use more U.S. Mexico content and Adiyaman auto manufacturing which is excellent for our region. Certainly what today's agreement though does accomplish is provide some certainty certainty and stability. The fact that we will preserve an agreement which we really need for our region and for the economy. Well let me take you back then when we last spoke you said you believed we were in the midst of a trade war. Does this agreement make you think that a trade war between the U.S. and Mexico can be avoided. Yes or it'll end. This potentially means we will see no longer see the tariffs on steel and aluminum imports from Mexico among other items that were tariffs. So the trade war between US and Mexico would end with an agreement. However it's nothing is signed yet you know and it does require Canada to be an official agreement according to the trade promotion authority the authorization for the president to negotiate was not to do a bilateral agreement. So Canada's integration into the agreement is absolutely critical. Now the stock markets seemed to greet this agreement with relief. Is it a relief to people concerned about trade. Yes absolutely. This is something that we have been working for for over a year and worried about it was a tremendous risk a threat to our economy and widely seen as such. So today's announcement is a great sign of progress also taken to the fact that the last few months have been stalled no progress has been made on them after the meetings between the three negotiating teams had come to an end or had been suspended. So this is a sign that great progress has been made. Both the U.S. and Mexico made concessions something that hadn't we hadn't seen before the sunset clause is no longer in there. It's been revised. Tell us what the sunset clauses the sunset clause previously was as proposed by the U.S. was where this agreement would end in five years unless automatically and unless the three countries would agree to keep it in place. It has been reworded now where it remains in place unless Congress decides and which is much better. The risk is not is not eminent. From your understanding say you've been keeping up with this I would imagine from your understanding how far away are trade negotiations in in getting Canada to come on board and be a part of this new agreement that is hard to speculate. The message we have heard from Canada is we are ready we're ready to meet and work on this. We were looking forward to seeing U.S. and Mexico reach an agreement but we don't know how far away that is the question how far away are we from concession. The U.S. now and Canada need to make concessions to reach an agreement. You would think I don't see Canada just folding over and saying OK I'll agree to everything now. I think there has to be concessions on both sides. Now earlier this year President Trump said he'd used the NAFTA negotiations to get Mexico to pay for a border wall. Apparently there's nothing about a border wall in this new agreement. Nothing about border security at all. Does that surprise you. No we have long heard from Mexico that they were not going to pay for the wall. They were not going to agree to any deal that would include paying for the wall. So that's not surprising. However I do think you accomplish security and and the assurance of security in the future with this agreement because this agreement as we had mentioned before is not just an economic or a trade agreement. It's an agreement of collaboration along with trade and the economy. You see Mexico and the U.S. collaborating on infrastructure issues environmental issues security issues immigration you need to have that agreement in place. It's a signal of additional cooperation. So what are the next steps for this trade agreement. Obviously contacting Canada for what they think of it right. I mean that's an obvious next step. And again the question is how long will that take. These recent negotiations between U.S. and Mexico lasted five weeks. The president of Mexico this morning tweeted that he expected or was hopeful that an agreement with Canada would be reached by the end of this week. So it's I think optimistic to think that it'll only take one week then to bring in Canada. But that is possible. The reason for that urgency on Mexico's part is for this current Mexican president president of Mexico to be the signer of the agreement. It has to be done by this week in order for it to be approved before he leaves office December 1st. So is there any concern that the new president will would not sign this agreement. Anything could happen. So that is the risk in something after so much work. You would hate to then have it threatened or at risk by a new administration that perhaps wouldn't find it so easily to come to an agreement. I've been speaking with Paula Avila with the San Diego Regional Chamber of Commerce. Paula thank you. Thank you.

UPDATE: 9:45 a.m., Aug. 27, 2018

President Donald Trump said he intends to terminate the North American Free Trade Agreement and call its replacement "the United States-Mexico Trade Agreement" — a name that would exclude the third NAFTA partner, Canada.

Trump made the comments after announcing an "understanding" with Mexico that could lead to an overhaul of the 24-year-old trade pact, which Trump has called a job-killing "disaster." Details of the U.S.-Mexico agreement were expected to be unveiled later Monday.

The president said he will be calling Canadian Prime Minister Justin Trudeau. Trump said, "If they'd like to negotiate fairly, we'll do that." He also threatened to tax Canadian auto imports to increase the pressure on Canada's government.

Trump said: "We could have a separate deal (with Canada) or we could put it into this deal."

RELATED: Cross-Border Production Across San Diego-Baja Region Tops $6B, Report Finds

Read original story.

U.S. and Mexican negotiators were preparing Monday to announce a deal that would set the stage for an overhaul of the North American Free Trade Agreement.

The White House said it planned an announcement on trade later Monday morning.

U.S. Trade Rep. Robert Lightizer and Mexican Secretary of Economy Idelfonso Guajardo walked together into the White House without talking to reporters. The delegation also included Jesus Seade, a World Trade Organization veteran tapped by Mexican President-elect Andres Manuel Lopez Obrador as his future chief trade negotiator.

"A big deal looking good with Mexico!" Trump tweeted Monday morning. Earlier, Guajardo told reporters, "There is one very important issue to finish."

U.S. and Mexican negotiators worked over the weekend to narrow their differences.

"There likely will be a deal today," said Daniel Ujczo, a trade attorney with Dickinson Wright PLLC who has followed the NAFTA talks closely.

Once they reach an agreement, the third country in NAFTA — Canada — would be brought back in to finalize a revamp of the 24-year-old pact. But the countries still must resolve difficult issues, including U.S. complaints about Canada's protection for its dairy farmers and the way disputes are resolved under NAFTA.

Adam Austen, a spokesman for Canadian Foreign Minister Chrystia Freeland, said: "Canada is encouraged by the continued optimism shown by our negotiating partners. Progress between Mexico and the United States is a necessary requirement for any renewed NAFTA agreement."

Austen said the Canadians had been regular contact with the NAFTA negotiators.

"We will only sign a new NAFTA that is good for Canada and good for the middle class," he said, adding that "Canada's signature is required."

NAFTA reduced most trade barriers between the three countries. But Trump and other critics say it encouraged U.S. manufacturers to move south of the border to exploit low-wage Mexican labor.

Talks to overhaul the agreement began a year ago and have proven contentious.The Trump administration wants a higher percentage of auto production to come from within the NAFTA bloc before qualifying for duty-free status.

Talks have also been stymied by the Trump administration's insistence on a "sunset clause" that would end NAFTA in five years unless all three countries agreed to continue it.