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US, Mexico and Canada ink new trade agreement replacing NAFTA

US, Mexico and Canada ink new trade agreement replacing NAFTA
Officials from Canada, Mexico and the United States have finalized a trade deal that will replace the 25-year-old North American Free Trade Agreement (NAFTA).

The new pact, called the US-Mexico-Canada Agreement (USMCA), was agreed on more than a year ago but needed approval by the legislatures in the three countries before it could move forward. Democrats in the US House of Representatives insisted on major changes to labor and environmental enforcement before bringing it to a vote.

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The deal will ensure stricter “rules of origin” for cars made and sold in the US, Mexico and Canada, including requiring that 75 percent of automotive components be produced within the three-nation trading bloc for companies to sell duty-free. That’s up from 62.5 percent under the NAFTA rules currently in place.

It also includes rules for digital trade and other technologies, most of which didn’t exist when NAFTA was signed in 1994. The USMCA requires free flow of data among the three countries.

US House Speaker Nancy Pelosi said the revised pact was “infinitely better” than what was initially proposed. US President Donald Trump, who had accused the Democrats of holding up the deal, also declared victory.

The USMCA will be “the best and most important trade deal ever made by the USA. Good for everybody – Farmers, Manufacturers, Energy, Unions – tremendous support,” he tweeted.

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Trump has repeatedly branded NAFTA as the “worst trade deal ever made,” saying the US has been unfairly treated in trade with its neighboring and oversees partners. He imposed a 25-percent tariff on steel imports and a 10-percent tariff on aluminum imports from Mexico, Canada, and the EU.

Canada and Mexico are the second and third-biggest US trading partners, each accounting for more than $500 billion in trade per year, almost rivaling China and the 28 EU member states combined. The US market accounts for 75 percent of Canada’s total exports.

For more stories on economy & finance visit RT's business section

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