JAKARTA (TheInsiderStories) – The United States (US) and Mexico government are close to sign a new trade deal, which President Donald Trump declared as ‘a big day for trade’.
In a written statement released by White House on Monday (27/08), Trump said his Administration has secured a preliminary US–Mexico Trade Agreement that modernizes and rebalances the trade relationship to reflect the realities of the 21st century.
However, Trump insisted that the trade deal will not be a new North American Free Trade Agreement (NAFTA), which the controversial businessman seeks to terminate since taking office. While there are details to be meted out, the deal could send a signal that Trump is wiling to reach a compromise with regards to trade issues.
This is a positive development for market participants, who are nervous with the escalation tit-for-tat trade tariffs between the US, China and the European Union.
He said, this agreement will create more reciprocal trade that grows the economy, supports high-paying jobs for American workers, and protects American intellectual property. New “rules of origin” requirements to incentivize billions a year in vehicle and automobile parts production in the US and will supporting high-wage jobs.
He continued, the 24-year-old NAFTA was outdated and unbalanced, hurting American jobs and businesses. Many Americans have been hurt by closed factories, exported jobs, and broken political promises resulting from the old NAFTA.
So far, NAFTA has contributed to US’s ballooning annual goods trade deficit, which grew from US$115 billion in 1993, the year before NAFTA’s implementation, to nearly $800 billion in 2017. The US went from a $1.6 billion goods trade surplus with Mexico to a $70 billion goods trade deficit during that same time period.
Trump explained, the old NAFTA includes many outdated provisions that have not been updated to reflect modern standards, new technologies, or the 21st century global economy.
Since taking office, President Trump has undertaken multiple trade negotiations in addition to NAFTA. He reached an agreement with the European Commission to work toward zero tariffs, increase energy exports, reduce non-tariff barriers, and address unfair trade.
Keeping another campaign promise, the Trump Administration successfully secured key amendments to the trade agreement with South Korea to strengthen of manufacturing base.
Meanwhile, Vice President Mike Pence added, the deal is marks a new chapter between the US and Mexico. He stated, “In addition, we have agreed to eliminate non-tariff barriers and take other steps to encourage more agriculture trade between our two countries.”
Unlike any previous bilateral trade deal, he continued, this agreement includes the strongest labor standards, and these requirements are fully enforceable.