The US and Mexico struck an agreement on key parts of NAFTA, moving a step closer to reshaping the massive trade deal
- The US and Mexico reached an agreement on parts of the North American Free Trade Agreement.
- The deal will retool rules regarding auto manufacturing and energy.
- Canada must agree to the new guidelines, and the trio must reach agreements on a handful of outstanding issues before they can reach a deal on a final NAFTA negotiation.
The US and Mexico reached an agreement on elements of the North American Free Trade Agreement, or NAFTA, a move that represents a significant step toward reshaping the landmark trade deal.
According to multiple reports, the two sides came to agreement on key issues regarding automobiles and the treatment of energy products.
Walking into negotiations on Monday, Mexico's economy minister Ildefonso Guajardo said a deal was close but there was "one more important item." A formal announcement could come as soon as Monday.
Some of the issues that were negotiated:
- A US push to increase the percentage of a car that had to be sourced from a NAFTA nation to move freely across the border of the three NAFTA nations. That percentage will be increased to 75% from the current 62.5%.
- A threshold for the amount of the manufacturing process that must be performed auto workers making $16 an hour or more.
- Mexican cars and trucks that do not meet the new rules will be assessed a 2.5% tariff.
Trump teased the deal in a Twitter post on Monday.
"A big deal looking good with Mexico!" he said.
Trump longed pushed for the renegotiation of NAFTA, saying the current deal is the "worst trade deal in the history of our country."
Any agreement on these key elements would also need the endorsement of Canada, the third member of the NAFTA bloc. Other US demands still need to be resolved in trilateral talks, with a sunset clause being the most contentious.
Jesus Seade, the representative for Mexican President-elect Andres Manuel Lopez Obrador, told reporters Saturday that the three sides could come together on some sort of agreement on a sunset clause.
The US has demanded a sunset clause, which would require a re-valuation of the deal every five years with the option to get out, as part of the talks. Both Mexico and Canada strongly oppose the idea because it would create economic uncertainty and allow the US to unilaterally wreck NAFTA.
The compromise could come in the form of regular evaluations of the agreement without the threat of combustion.