After over a year of negotiations to update NAFTA, Mexico and the US have come to an agreement to ditch the old treaty in favor of a new bilateral deal. Although there are still no details regarding the actual points covered in the new agreement, US President Donald Trump and President Enrique Peña Nieto have already congratulated each other regarding the outcome of the negotiations.

For weeks, negotiators from Mexico and the US have trumpeted the possible end of talks regarding NAFTA. In Mexico, Peña Nieto had until last Saturday to confirm an agreement that could be signed by his administration instead of that of President-Elect Andrés Manuel López Obrador. However, Canada had been absent from the negotiation table since before the Mexican Presidential elections waiting for this country to resolve its bilateral differences with the US. Though talks remained sour due to looming tariffs on automotive imports in the US and the changes in rules of origin for automotive production, both countries expected to find common ground before the end of the month.

Today, however, President Trump announced via Twitter “A big deal looking good with Mexico.” Later, at a press conference at the White House, Trump disclosed that negotiations were finally fruitful resulting in a new trade agreement between Mexico and the US. “NAFTA has a lot of bad connotations for the US because it was a rip-off,” he said during the press conference. “It was a deal that was a horrible deal for our country.”

There are still no clear details regarding the content of this new treaty but so far, demands regarding the automotive industry require companies to comply with a 75 percent regional production content, as well as a certain proportion of manufacturing activities completed by workers paid salaries of at least US$16 per hour.

The new bilateral treaty would be called United States-Mexico Trade Agreement according to Trump, which he said was an “elegant” name for this new partnership, which so far does not include Canada. During his press conference, Trump received a call from Peña Nieto who praised Trump for the deal but also urged for Canada to rejoin the negotiations and become part of the deal. Meanwhile, Trump said Canada could either join the agreement, have a separate one with the US or work according to the US’ imposed tariffs. “Frankly, a tariff on cars is a much easier way to go,” he said.

The data used in this article was sourced from CBS News and the NY Times. 

Don’t forget to follow us on twitter at @mexautomotive and @mexautomotriz for the latest industry news.

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