US, Mexico, Canada sign new free trade deal

The leaders of the US, Mexico and Canada today signed a new free trade deal that replaces the North American Free Trade Agreement (Nafta).

"It has been a battle," US president Donald Trump said at the signing ceremony on the sidelines of the G20 summit in Buenos Aires. "We have taken barbs and great abuse."

Trump came to office with a promise to rip up Nafta, and his pledges during the negotiating process to set it aside have riled Mexico and Canada, as well as key stakeholders in the US energy sectors. But in the end, Trump praised the US-Mexico-Canada Agreement (USMCA) as "the most modern agreement ever signed, and probably the biggest trade deal ever."

US energy companies back the new agreement overall, as it preserves free trade in energy commodities. But they hoped that the text would better protect results of the historic changes that opened Mexico's energy sector to foreign participation.

Mexican president Enrique Pena Nieto, who steps down from office tomorrow, said the agreement will make North America stronger and more prosperous. Pena Nieto today awarded the Order of Aztec Eagle - the highest honor awarded to foreign citizens - to Trump's senior adviser and son-in-law Jared Kushner, who has served as a key go-between during the negotiation process.

"While there has been a lot of tough talk, I have seen the genuine respect and care that President Trump has for Mexico and the Mexican people and I do believe we have been able to put that in the right light," Kushner said.

Canadian prime minister Justin Trudeau, who persisted in calling the agreement "the new Nafta" rather than using the USMCA designation preferred by Trump, said the deal lifts the uncertainty over the future of the North American economy. Trudeau noted automaker General Motors' plan to idle five North American plants while laying off up to 15,000 employees next year, and told Trump "it is all the more reason why we need to keep working to remove steel and aluminum tariffs on our countries."

Tariffs on imports of steel and aluminum from Canada and Mexico to the US, and retaliatory tariffs imposed by Ottawa and Mexico City on US agricultural and other exports, are potentially weighing on the ratification process in Canada.

The ratification path appears easiest in Mexico, where president-elect Andres Manuel Lopez Obrador's Morena coalition has a majority in both chambers of the legislature.

US trade laws set an expedited procedure for Congress to vote in favor of the agreement or to turn it down. But both the US House of Representatives and the Senate must vote to approve it. The House will be under Democratic control beginning in January, while Republicans have retained their majority in the Senate.

The next step in the US ratification procedure, within 105 days following the signing of the agreement, is for the US International Trade Commission to prepare a cost-benefit analysis.