Shares of the largest U.S. automakers got a boost Monday after President Donald Trump said the USA and Mexico have reached an agreement on elements of NAFTA, marking a significant step toward reshaping the landmark trade deal. Outgoing Mexican President Enrique Peña Nieto, in a televised phone call with Trump on Monday, stressed Mexico’s desire to include Canada in the pact.
The White House told Congress a year ago that it would renegotiate NAFTA, but never said it would start talks on an entirely new deal.
The president said he is willing to call Canadian Prime Minister Justin Trudeau, adding, “If they’d like to negotiate fairly, we’ll do that”.
We’ll get rid of the name NAFTA. The administration didn’t go into specifics, but said the proposed United States-Mexico Trade Agreement is a “mutually beneficial win for North American farmers, ranchers, workers and businesses”.
The Trump administration wants a higher percentage of auto production to come from within the Nafta bloc before qualifying for duty-free status.
Mr. Trump called it a big day for trade, and for the country.
The peso rose ahead of Trump’s remarks.
U.S. stocks also advanced, with auto suppliers and rail companies among the top gainers.
There is no deal reached yet with Canada, people familiar with the agreement said.
He has repeatedly demanded renegotiation of the 1994 agreement, which he blames for a decline in United States manufacturing jobs, especially in the auto industry.
A spokesman for Canadian Foreign Minister Chrystia Freeland issued a statement on Monday that warned against jumping to conclusions.
Analysts at Rabobank, point out that today’s announcement regarding NAFTA, is not a bilateral agreement between Mexico and the USA, instead, is effectively two out of three parties agreeing to what a trilateral agreement should look like.
Cannabis stocks such as Cronos Group and Tilray were among the best performers for the Nasdaq, both climbing more than 20 percent in Monday trades on hopes of more deal-making between alcohol and cannabis companies. Conservative foreign affairs critic Erin O’Toole says it was a “colossal failure” that Canada stayed away from the bargaining table for the last few weeks and allowed the USA and Mexico to carry on in its absence.
That provision would have allowed USA produce suppliers to make a claim of anti-dumping against Mexican producers when it shipped large amounts of produce into the U.S.at certain times of the year. He declined to identify the issue.
The NAFTA talks have dragged on for a year. The president said in June that a refurbished NAFTA deal could remain trilateral or could be renegotiated into two separate arrangements.
In order to meet that deadline, negotiators must present Congress with a deal at least 90 days in advance.
Mexico-focused iShares MSCI Mexico ETF was up 2.1 per cent. He described the trilateral pact as a disaster, blaming it for massive jobs losses in the U.S. manufacturing sector. Under the current NAFTA, the so-called rules of origin set a minimum of 62.5 per cent.
Auto-immunity: Per Reuters, the agreement helps resolve one of the stickiest issues that arose under NAFTA surrounding the rules of origins for cars, which required that a certain percentage of vehicle parts be from countries within the NAFTA region in order to avoid tariffs.
The deal would resolve disagreements on labour rights, and tightens local content requirements for autos, among other things.
However, all this remains in doubt as a key NAFTA signatory, Canada, is yet to agree on the terms.
The resolution of other sticking points was unclear.
Canada, which is part of NAFTA, is not participating in the announcement.