Top officials from Canada, Mexico and the United States signed a fresh overhaul of a quarter-century-old trade pact on Tuesday that aims to improve enforcement of worker rights and hold down prices for biologic drugs by eliminating a patent provision.
The signing ceremony in Mexico City launched what may be the final approval effort for US President Donald Trump’s three-year quest to revamp the 1994 North American Free Trade Agreement (NAFTA), a deal he has blamed for the loss of millions of US manufacturing jobs.
The event at the National Palace was attended by Mexico President Andres Manuel Lopez Obrador, Canadian Deputy Prime Minister Chrystia Freeland, US Trade Representative Robert Lighthizer, and US White House adviser Jared Kushner.
The result of a rare show of bipartisan and cross-border cooperation in the Trump era of global trade conflicts, the deal was inked the same day as he became the fourth US president in history to face formal impeachment.
“They approved it today of all days,” Trump told reporters at the White House, calling it the “silver lining” of impeachment.
The pact quickly got bogged down in more party division, however, as US Senate Majority Leader Mitch McConnell said he would likely wait for a vote on the deal until after the impeachment trial - likely kicking ratification into next year. Friction also emerged over how intrusive foreign enforcement of labor rules would be in Mexico.
Nonetheless, Lighthizer called it “a miracle” that unions, businesses and actors from across the political spectrum had come together, saying it was a testament to the benefits of the deal. Lopez Obrador credited Trump for working with him, while Freeland celebrated a win for multilateralism.
“We have accomplished this together at a moment when, around the world, it is increasingly difficult to get trade deals done,” she said.
The US-Mexico-Canada Agreement (USMCA) was signed more than a year ago to replace NAFTA, but Democrats controlling the US House of Representatives insisted on major changes to labor and environmental enforcement before bringing it to a vote.
The delay at times threatened to scuttle the deal, creating investment uncertainty in all three countries and worrying US farmers already suffering tariffs stemming from Trump’s trade war with China.
Intense negotiations over the past week among Democrats, the Trump administration, and Mexico produced more stringent rules on labor rights aimed at reducing Mexico’s low-wage advantage. Both Canada and the US House Ways and Means Committee said the deal included a mechanism for verification of compliance of union rights at the factory level in Mexico by independent labor experts.
“It is infinitely better than what was initially proposed by the administration,” House Speaker Nancy Pelosi told a news conference, adding that USMCA was now ready for a House vote.
Both the US United Steelworkers union and the AFL-CIO labor unions endorsed the revised deal.
However, Mexico’s chief negotiator Deputy Foreign Minister Jesus Seade said all disputes would be resolved through panels, and denied there would be anything like foreign labor inspectors in Mexico.
There was no immediate sign of the agreement being made public.
Some Mexican business groups fear that Lopez Obrador and Seade have ceded too much.
Gustavo Hoyos, president of employers federation Coparmex and a vocal Lopez Obrador critic, called the government “a bad negotiator.” Other business groups focused on the positive and welcomed the looming end to months of uncertainty.
Seade himself said some of the changes were reasonable but not necessarily “good for Mexico.”