Trump Strikes Nafta Deal with Mexico and Threatens to Freeze Out Canada
“Automakers urge the U.S. and Mexico to quickly re-engage with Canada to continue to build on this progress,” the Alliance of Auto Manufacturers, which represents most carmakers that sell vehicles in the United States, said in a statement. “The industry is hopeful that any changes to Nafta auto rules of origin continue to strike the right balance by incentivizing production and investment in North America while keeping new vehicles affordable for more Americans.”
In a briefing Monday, administration officials said that the United States and Mexico had also come to an agreement on a controversial “sunset clause,” proposed by the Trump administration, that would cause Nafta to automatically expire unless the three countries voted to extend it.
The two countries agreed to a review of the trade pact every six years that would extend its lifetime for 16 more years, officials said. That longer time horizon would give lawmakers a chance to review the trade pact’s progress, while also giving businesses certainty for the immediate future.
The countries also came to an agreement that would limit the kinds of legal challenges that investors can currently make against foreign government under Nafta. The oil and gas, infrastructure, energy generation and telecom industries are exempted from these more restrictive rules, and will continue under their previous terms, Mr. Lighthizer said — a win for those industries.
It is unclear how eager Canada will be to sign on to a deal containing these revisions. But any agreement that doesn’t involve Canada is likely to face legal challenges and intense opposition from Congress, which had granted the Trump administration authority to renegotiate Nafta as a trilateral deal.
In a statement, Senate Finance Committee Chairman Orrin G. Hatch, a Republican from Utah, said that improving Nafta would help American businesses, manufacturers and farmers but that a bilateral deal was not the answer. “To achieve that goal, a final agreement should include Canada,” he said.
“Once again, President Trump is announcing a victory before he has an agreement,” said Lloyd Doggett, a Democratic Congressman from Texas. “While avoiding a trade war against Mexico, our #1 Texas trading partner, we cannot secure a complete, improved North American agreement without Canada, our #2 trading partner.”