Tariff tensions shadow US, Canada, Mexico trade pact signing

BUENOS AIRES, Argentina (AP)—President Donald Trump signed a revised North American trade pact with the leaders of Canada and Mexico Nov. 30, declaring the deal a major victory for workers. But tensions over tariffs, looming GM layoffs and questions about the pact’s prospects in Congress clouded the celebratory moment.

The U.S.-Mexico-Canada Agreement is meant to replace the 24-year-old North American Free Trade Agreement, which Trump has long denigrated as a “disaster.” The leaders signed the new deal on the sidelines of the Group of 20 summit in Buenos Aires after two years of frequently blistering negotiations. Each country’s legislature still must approve.

“This has been a battle, and battles sometimes make great friendships, so it’s really terrific,” Trump said, before lining up next to Canadian Prime Minister Justin Trudeau and outgoing Mexican President Enrique Pena Nieto to sign three copies of the deal—Trump using a black marker for his signature scrawl.

The signing came at the beginning of a packed two days of diplomacy for the American president.

“There’s some good signs,” Trump said. “We’ll see what happens.”

For the new North American trade deal, legislative approval is the next step. That could prove a difficult task in the United States, especially now that Democrats—instead of Trump’s Republicans—will control the House come January. Democrats and their allies in the labor movement are already demanding changes.

Within hours of the signing, Senate Democratic Leader Chuck Schumer said the deal must have stronger labor and environmental protections to get majority support in Congress and “must prove to be a net benefit to middle-class families and working people.”

Democratic House Minority Leader Nancy Pelosi—who is seeking to become House speaker in the new year—quipped, “The trade agreement formerly known as Prince—no, I mean, formerly known as NAFTA, is a work in progress.”

Still, Trump projected confidence, saying: “It’s been so well reviewed I don’t expect to have very much of a problem.”

Trump is describing USMCA as a landmark trade agreement. But most companies are just relieved that it largely preserves the status quo established by NAFTA: a regional trade bloc that allows most products to travel between the United States, Canada and Mexico duty free. During the negotiations, Trump repeatedly threatened to pull out, a move that would have disrupted businesses that have built complicated supply chains that straddle the borders of the three countries.

The new agreement does make some changes to the way business is done in North America. It updates the trade pact to reflect the rise of the digital economy since the original NAFTA took effect nearly a quarter century ago. It gives U.S. dairy farmers a bit more access to the protected Canadian market.

The biggest changes target the auto industry. The new deal encourages auto companies to invest or expand in the United States and Canada, not low-wage Mexico, by requiring that 40 percent of a car’s content be made where auto workers earn at least $16 an hour; otherwise, the cars won’t qualify for USMCA’s duty-free treatment.

Trudeau said the deal “lifts the risk of serious economic uncertainty” and said Canada worked hard for a “new, modernized agreement.” But he also used the ceremony to call on Trump to remove steel and aluminum tariffs the U.S. slapped on Canada and Mexico. Trudeau also referenced recent downsizing moves by GM in North America as a “heavy blow.”

Pena Nieto, who handed off to his successor, said he was honored to be at the signing on the final day of his administration, calling it the culmination of a long process “that allow us to overcome differences and to conciliate our visions.”

Secretary of Agriculture Sonny Perdue said in a statement, “I have often said that we live in the best neighborhood on Earth—North America—and the signing of a new trade agreement with Mexico and Canada helps cement our highly integrated relationship as nations. President Trump has fulfilled a promise, which many said couldn’t be done, to renegotiate NAFTA and improve the standing of the entire American economy, including the agriculture sector.

“The new USMCA makes important specific changes that are beneficial to our agricultural producers. We have secured greater access to the Mexican and Canadian markets and lowered barriers for many of our products. The deal eliminates Canada’s unfair Class 6 and Class 7 milk pricing schemes, opens additional access to U.S. dairy into Canada, and imposes new disciplines on Canada’s supply management system.

The agreement also preserves and expands critical access for U.S. poultry and egg producers and addresses Canada’s discriminatory wheat grading process to help U.S. wheat growers along the border become more competitive.

“This is good news for American farmers and we now need Congress to follow suit and enact the necessary implementing legislation. I commend President Trump and our U.S. Trade Representative, Ambassador Robert Lighthizer, for their perseverance, leadership, and hard work.”

Farm groups approved of the signing of the agreement.

U.S. Grains Council President and CEO Tom Sleight said, “The ceremony to sign the U.S.-Mexico-Canada Agreement is an important next step in the new pact’s final approval and the process of modernizing the most important trade agreement to U.S. grain farmers and exporters.

“In the latest marketing year, Mexico and Canada again proved to be top buyers of U.S. feed grains in all forms, and both countries still hold significant potential for market expansion given the right trade policy frameworks and the robust market development we intend to undertake there with our partners.

“We applaud the many members of the Trump administration, as well as their Mexican and Canadian colleagues, who worked diligently to negotiate this agreement. We see its forward movement as a sign our countries will continue our robust relationship, as business partners and friends.”

National Sorghum Producers Board of Directors Chairman Dan Atkisson, a sorghum farmer from Stockton, Kansas, said, “The new USMCA agreement is well received news for sorghum producers. The new trilateral agreement with Mexico and Canada is an important step forward as the United States works toward fair, open trade markets. Mexico continues to be a top buyer of U.S. grain sorghum, and we will strive for continued market expansion with our southern neighbors.

“We appreciate the efforts put forth by leadership from each participating country. We see this as a win for producers and hope to carry the progressive momentum into 2019. We encourage congress to promptly approve the new agreement.”

In a joint statement, the National Association of Wheat Growers and U.S. Wheat Associates applauded the three countries for working together to finalize USMCA.

“This agreement includes important provisions for wheat farmers. Most notably, USMCA retains tariff-free access to imported U.S. wheat for our long-time flour milling customers in Mexico. That is a crucial step toward rebuilding trust in U.S. wheat as a reliable supplier in this important, neighboring market,” the statement said.

“In addition, the USMCA makes important progress towards more open commerce for U.S. wheat farmers near the border with Canada. Currently under Canadian law, wheat grown in the United States delivered to Canadian grain elevators is automatically designated as the lowest grade wheat. Canadian wheat delivered to U.S. elevators, however, may enter the system without penalty. This disincentive for U.S. farmers when they would otherwise see higher cash bids across the border is unfair.

“The updated USMCA agreement would enable U.S. varieties registered in Canada to be afforded reciprocal treatment. While there are remaining challenges, we applaud the administration for negotiating this critical provision in the USMCA and taking a big step towards reciprocal trade along the U.S.-Canadian border.”

National Cattlemen’s Beef Association President Kevin Kester said, “With the signing of the U.S.-Mexico-Canada Agreement, U.S. beef producers are one step closer to knowing that unrestricted, science-based trade will continue in North America. The agreement brings the trading relationship with our neighbors into the 21st century—and clearly rejects the failed beef and cattle trade policies of the past. Open markets have helped U.S. producers flourish and created billion dollar markets for U.S. beef. We look forward to working with Congress to get USMCA passed into law as quickly as possible.”

Senior field editor Larry Dreiling and Associated Press writers Rob Gillies in Toronto and Deb Riechmann, Darlene Superville and Paul Wiseman in Washington contributed to this report.