New NAFTA Pact Signed
December 3, 2018
President Trump, Canadian Prime Minister Justin Trudeau and outgoing Mexican President Enrique Pena participated in a ceremonial signing at the Group of 20 Summit in Buenos Aires on the revised NAFTA trade pact, called the “U.S.-Mexico-Canada Agreement” (USMCA). The signing culminated year-long negotiations among the three countries on an update to the 25-year old trade pact.
Although some provisions, such as auto tariffs, go into effect immediately, the USMCA needs to be ratified by lawmakers in the three countries. It is likely that congressional action on the trade pact will not occur until next year when the Democrats control the House. Both Democrats and Republicans on Capitol Hill have called for changes to the USMCA; however, under the “fast-track” rules for consideration of the regional trade pact, it subject to an up-or-down vote within 90 legislative days after submission by the president.
President Trump said on Air Force One on his return flight from Argentina that he would give notice of his intention to terminate the existing NAFTA, which would give Congress a six-month window to ratify the new USMCA.
“I will be formally terminating NAFTA shortly,” President Trump said. “So, Congress will have a choice” between the USMCA or the trade status before NAFTA was ratified.
“ILMA members like certainty, so we commend the leaders of the three countries for reaching an agreement that keep our nations’ borders open to commerce,” said ILMA CEO Holly Alfano. “While the Association’s preference for non-tariff treatment of non-North American Group III base oils was not included in the final deal, there is enough in the USMCA to help lubricant manufacturers.”
The three countries signed the trade pact the day before President Trump met with Chinese President Xi Jinping to discuss the escalating trade dispute between the two countries. The White House announced that the two the leaders agreed to a 90-day pause on new tariff actions while Washington and Beijing attempt to negotiate an agreement on intellectual property, technology theft, and non-tariff trade barriers.
The “pause” with the Chinese leaves in place U.S tariffs already in place, including lubricants and additives. President Trump agreed to hold off his announced increase in tariffs on some $250 billion in Chinese goods from 10 to 25 percent.