President Donald Trump announced broad agreement on a new trade deal with Mexico on Monday. A spokesperson for The Heritage Foundation says as it stands, the agreement isn't a winning deal for the U.S. – but that's not to say it couldn't become that.
Wanting to distance the new agreement as much as possible from NAFTA* – its George H.W. Bush and Clinton predecessor – President Trump is naming it the "United States Mexico Trade Agreement." During a phone call with Mexican President Peña Nieto, Trump said "... this is something that's very special for our manufacturers and for our farmers from both countries, for all of the people that work for jobs. It's also great trade and it makes it a much more fair bill. And we are very, very excited about it."
Tori Whiting of The Heritage Foundation says the new trade agreement has a provision affecting car manufacturers.
"The U.S. and Mexico have agreed to increase what we call 'rules of origin' – the rules that govern how an automobile is considered to be made in North America," she explains. "And then also some wage requirements for a certain percentage of the production to happen at $16 per hour."
But at this point, Whiting doesn't see it as a winning deal for the U.S. or Mexico. "In my opinion, those really look like a lot of regulatory barriers on our businesses that have been setting up their supply chains for over 20 years – and you're actually seeing a lot of pushback from the auto industry here in the United States," she shares.
According to Whiting, many issues remain to be addressed in a final deal – not to mention that President Trump will want to include Canada in any pact. Its foreign minister rushed home from abroad to start that process.
Whiting adds: "We still have to deal with things like a sunset clause in the proposal that the administration has put forward, and energy, intellectual property – there are many things still left on the table for all three countries to discuss."
On Wednesday, Canadian Prime Minister Justin Trudeau hinted it's possible that a deal with his country could be reached before the end of the week. "... It will hinge on whether or not there is ultimately a good deal for Canada," he stated. "No NAFTA deal is better than a bad NAFTA deal."
Whiting says the final deal – regardless if it includes Canada – will most likely be even better for the U.S., given the president's track record with economic negotiations. "We just need to be focusing in these negotiations on increasing trade overall and making trade easier overall," she concludes.
* North American Free Trade Agreement