The US, Canada, and Mexico are moving closer to finalizing a trade deal that would replace NAFTA.
- Rewriting the agreement was one of President Donald Trump’s key campaign promises, but independent experts have found the overhaul doesn’t differ significantly from trade policies that have governed the region for 25 years.
- But potential hurdles remain for the agreement, which is subject to an up-or-down vote in Congress.
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The US, Canada, and Mexico are moving closer to finalizing a trade deal that would replace the 25-year old NAFTA, a key campaign promise for President Donald Trump.
The Trump administrationrolled back steep tariffs on metal from its North American neighbors on Friday, clearing a major obstacle for ratification of the United States-Mexico-Canada Agreement reached last year.
Trade negotiators and some lawmakers had previously signaled they would be hard pressed to move forward with USMCA unless the US removed tariffs of 25% on steel and 10% on aluminum, which had been announced in March of last year.
“Now that that big obstacle is lifted, full steam ahead,” Canadian Foreign Minister Chrystia Freelandtold CBC radio in an interview.
Republican lawmakers including Senate Finance Chairman Chuck Grassley haveechoed a similar sentiment, but ratification could still face obstacles in the US. Not lost on the legislative win it would offer Trump ahead of 2020, top Democrats have been pushing for stricter labor standards and enforcement mechanisms in the deal.
In April, the International Trade Commissionfound that USMCA would have a positive but modest effect on the US economy.
The independent experts said the trade deal would increase gross domestic product by 0.35 percentage points or $68.5 billion by the time the deal is fully implemented in six years. The auto industry would create roughly 30,000 jobs under the agreement, the congressionally-mandated report said, but overall American car production and consumption would fall because of higher prices.
“It is no surprise that the USITC found that consumer prices will go up but the impact in the economy as a whole is likely to be small and perhaps negligible,” said Hugo Perezcano Díaz, the deputy director of International Economic Law with the Centre for International Governance Innovation.
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