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New "Limited" US-Mexico Trade Agreement


RickS

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More details:

Trump just announced there 
" ~ will be ~ a "Mexico-USA Trade Agreement" ...   but WH spokespeople are clarifying that it is just an "understanding to agree" ... with Mexico.

=> There is NO real agreement. ... There are no formal details worked out, (just proposals), especially on the Sunset Clause ... There are no deadlines nor timelines to actually create a real agreement.

=> Trump has NO legal authority to make an agreement with just Mexico, because his hands have always been tied by the US law & the current NAFTA agreement.

=> By US law, Trump can currently only make a tri-lateral agreement, simultaneously, with both Mexico & Canada due to contractual obligations under NAFTA. ... Before Trump can legally negotiate any terms for a bilateral agreement with just Mexico, he must give Congress 6 months (180 day) notice.   No such notice has been given.
https://www.cnbc.com/2018/08/21/a-us-mexico-deal-not-without-congress.html

=> Because Trump has zerocurrent  legal authority to negotiate a bi-lateral deal with Mexico, and NO specific terms have actually been worked with Mexico 
... Today's announcement has elements of smoke & mirrors ... until there's a real agreement that BOTH Canada & Mexico agree to.

... only then, can Trump & Co. start the legal 90-day clock to notify Congress of the "terms of the agreement". (per Bloomberg)

Fortunately, there is a path to a real agreement, but that path runs right through Ottawa.
Will Trudeau stick to principles & specifics that are beneficial to all three nationalities: Mexicans, USA-nians & Canadians?

https://www.cbsnews.com/news/trump-nafta-announcement-mexico-trade-deal-today-live-updates-2018-08-27/

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Per Bloomberg ... Lighthizer, the White House's top trade negotiator, has just leaked some unofficial details on the "US-Mexico Understanding to make a Trade Agreement"

~  16 yr Trade Agreement(s) with 6 year reviews:   The USA has abandoned their previous demands for a "5-yr Sunset Clause".   Instead, Lighthizer says the new "Trade Agreement" is proposed to last for 16 years ...  Further, every 6 years there would be a "tri-lateral review" of the "Trade Agreement",  and if the results of "tri-lateral review" are positive, then the "Trade Agreement" would be re-authorized for another 16 years.

~  Regardless of Trump's announcement of a "US Mexico Trade Agreement",  instead, Lighthizer (WH's top negotiator) acknowledges that there is no agreement without Canada's approval, 
and

=> the official US policy now is that they "hope Canada will agree to" the understandings that Mexico has worked out with the White House.



 

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When I was a kid we played “Let’s Pretend.” We’d agree on a basic setup and who wanted to play. The rest was improv. “Let’s pretend we’re lost in the woods.” “Let’s pretend we’re a family moving into our new house.” “Let’s pretend we are cowboys and Indians at a fort.” Looks like Trump is playing “Let’s pretend I am a president who can do whatever I want because there are no laws, rules, policies, treaties, and regulations” He expects everyone will play along and pretend too. And, at least in the Oval Office, that is what happens. 

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MORE DETAILS:
~ The Guacamole Clause .... Trump capitulated on his prior demands for trade barriers to block seasonal fruit and vegetables from Mexico. ... Mexican avocados will continue to flow !!

~ North American content in cars is increased from 62% to 75%. (This cuts out lots of Chinese parts, and likely substitutes more Mexican parts.)

~ More North American steel, aluminum & glass must be used in NAFTA manufactured cars. 

~ 40% - 45% of a "vehicle's value" must be made in "high wage areas" by auto workers manufacturing cars paid at least $16 USD per hour - plus a nebulously~mysteriously described clause included to supposedly force increased US auto manufacturing.

~ Mexico's trade negotiator says Mexico is ready to comply with these new terms & changes.

~ The Chapter 19 arbitration system has been heavily "scaled back" ... now covering only "expropriation, favoritism for local firms and state-dominated sectors such as oil power and infrastructure."

~ New rules on intellectual property, digital information, etc are added, to cover changes arising from the digital age, that did not exist when NAFTYA was first negotiated.

~ North American content in other manufactured goods must also be increased. (more specifics to be released in the future)

From NPR reports and https://timesofindia.indiatimes.com/.../arti.../65571262.cms

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There are requirements for Congress to act within time restraints, inclusion of Canada, etc., and all before AMLO takes office.  I think that a shoehorn might me needed, along with a magic wand. Just more 'smoke and mirrors' as distraction, along with obvious threats of tariffs, and/or withdrawal from NAFTA.  What does Canada say?

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21 hours ago, Xena said:

I believe Canada’s response has collectively been (loosely translated): Bite me. 


Not so much, especially by the Canadians who make those decisions.

On NPR, PBS and other reliable sources, Canadian experts have been saying yesterday & today, that they find a lot of very attractive terms & conditions in the proposed changes to re-negotiate (update) NAFTA.

A member of Canada's official Canadian NAFTA Advisory Council explained (on NPR) that Canadians are frustrated that Trump does not treat Canada as a good neighbor, but the Canadian NAFTA Advisory Council members also say that Trump is rude & bullying with Australia, Gr. Britain, Germany & Europe on trade issues.   Consequently, Canadian representatives are saying  that Canadians are resigning themselves to saying that Trump is a bully and a boor with other nations on trade issues,  so, Canadians realize that they are being treated the same as other allies.

The Canadian NAFTA Advisory Council members are also saying that they must respect Trump's threats to put special tariffs on Canadian autos,  just as he did with steel & aluminum.  In summary,  important Canadians are saying that the proposed updates to NAFTA are beneficial to Canada,  that soft-wood disputes will contintue to be an  unresolved problem "as they have been for over 100 years",  and that Canada is likely going to approve the proposed updates to NAFTA.

??

https://www.npr.org/2018/08/29/643062056/canadian-officials-say-the-unwinding-of-nafta-is-not-their-biggest-trade-concern
 

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1 hour ago, Bandol said:

But CG that presumes that Americans will continue to buy the more expensive CDN goods when the tariff is imposed.  

It presumes, I think, that they will buy whatever they want, as usual. Remember, these tariffs are mostly on goods to make products, not generally speaking finished product. So, when food manufacturers can't buy cheap canola oil anymore, construction firms can't buy cheap lumber, auto plants can't buy cheap steel... consumers aren't buying bottles of oil, or pieces of pine. The price of their own products goes way up. Furthermore, Canada has huge markets for exports in many other countries; it won't suffer much, if at all.

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1 hour ago, Bandol said:

All good patriotic thoughts CG and might even come to pass.  I haven’t been able to afford to live in Canada for years and am happy that US/Mex will enter into a mutually beneficial trade agreement.  

I couldn't afford to live in downtown Toronto or downtown Vancouver either now but have enjoyed both in my life. But there are a lot of other very nice places to live in Canada so I question your statement on "Canada". I would also suggest that you read the links in this thread because the US/Mex agreement is not a fait accompli by any means.

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Per NPR ... 
Both Canada's top NAFTA official and the Canadian Foreign Minister sounded positive, somewhat optimistic notes late yesterday and this morning about their expectations that the they could work out acceptable changes to NAFTA - and that they saw positive things in the current proposed terms & changes worked out between Mexico and the USA.

Even Trudeau took a balanced approach, saying that he would sign a deal if it was fair,  but that he would not sign if "bad" ... Trudeau drew his own line in the sand, saying::
"No NAFTA deal ... is better than a bad NAFTA deal." ... 

So, the top Canadians in charge of negotiating & approving the proposed changes to NAFTA, are all on the same page - and it is not the "Bite me"     proposed above.

We wish all 3 parties   ~Good Luck~   in crafting a deal that benefits the people of North America.

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14 hours ago, Bandol said:

But CG that presumes that Americans will continue to buy the more expensive CDN goods when the tariff is imposed.  

.
They must continue to buy CDN goods,  because the USA clearly does not have everything it needs ... USA-nians need Canadian steel, lumber, aluminum, wheat and even $40 billion a year of Canadian oil      and    maple syrup.
;)


 

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Trade talks with Canada will restart next week as Trump seeks a deal in 90 days 

  • The United States and Canada will restart trade talks next week after going past the Trump administration's Friday deadline without reaching a new trade agreement.
  • The U.S. and Mexico struck a deal earlier in the week.
  • The Trump administration notified Congress that it wants to sign a trade agreement with Mexico, and potentially Canada, in 90 days.


https://www.cnbc.com/2018/08/31/trade-talks-with-canada-will-restart-next-week-as-trump-seeks-a-deal-in-90-days.html

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The Canadian steel that I am aware of is produced by US Steel in Hamilton, Ontario. The other large employers of Ontario are Ford, GM &Chrysler who in turn buy a lot of parts from a Canadian company (forget the name, the daughter was in politics for a while). Caterpillar moved their operation back to the states. Quebec has home grown industries like Bombardier and SNC Lavalin. I believe tar sand oil exports may start to suffer because its a so called dirty oil (yes I have shares with TSLA...)

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I don't think Canada has anything to worry about, as I'm sure the Europeans, or Mexicans, or Chinese, or Saudis will pick up all those products that the  Canadians currently sell to the Americans if the deal goes bad. The cars will be the first thing exported abroad. I can't see Trump backing down, so if Canada is not willing to even the playing field, the US will just do without or buy elsewhere, maybe from new Mexican businesses, as AMLO seems eager to put the Mexican people to work. That would workout to a big plus for Mexican investors.

 

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" so if Canada is not willing to even the playing field "

It is my understanding that as a result of the North American Free Trade Agreement, 99 per cent of the trade between Canada and the U.S. is tariff-free and that overall, the U.S. ran a nearly $3 billion surplus in goods and services trade with Canada last year.

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