Though it seemed unlikely at times, the process toward a renewed trade relationship between Mexico, Canada and the US is close to an end. Today, President Enrique Peña Nieto, US President Donald Trump and Canadian Prime Minister Justin Trudeau signed the new United States-Mexico-Canada Agreement (USMCA) that will replace the 24-year-old NAFTA treaty.

All three mandataries gathered at Buenos Aires for the G20 meeting and as the summit started, USMCA became a reality. Although negotiations were still going hours before the signing to finalize smaller details in the agreement, Peña Nieto managed to sign the agreement on his last day in office before President-elect Andrés Manuel López Obrador (AMLO) entered office. The signing came after months of negotiations and a last-minute agreement on September 30 to have the final draft ready for signing on November 30, 2018. This, however, does not mean all is said and done regarding the new trade relationship. USMCA still needs to be ratified by congresses in Mexico, Canada and the US and that could still be a rocky path to go.

After the midterm elections in the US, Democrats regained control of the House of Representatives and the party is now pushing for further amendments to the treaty, particularly regarding stricter enforcement of labor agreements and higher salary conditions. However, Robert Lighthizer, US Trade Representative said the Trump administration is ready to work with the US Congress to solve any concerns from the Democrat side. “We still need to put together an implementing bill so there are things that we can do. But I want to remind everyone that this was negotiated from the beginning to be a bipartisan agreement,” he said. Meanwhile, with AMLO’s Morena party win in Mexico, new lawmakers in office could also ask for changes to previously stated conditions, though there have been no clear announcements at the moment on potential demands the new ruling party could have.

Lingering tariffs on steel and aluminum also remain a concern for Canada and Mexico. Originally used as a coercive tactic to move NAFTA negotiations along, US tariffs on metals have not been lifted for Mexico and Canada. “We need to keep working on removing the tariffs on steel and aluminum,” said Trudeau during the signing of the new agreement. Negotiations on this subject will continue now that the deal has been finalized but the US position is to handle it separately with Mexico and Canada. “So what the president has asked me to do is to find a way forward that is satisfactory to the Mexicans and to the Canadians in separate agreements,” said Lighthizer in Buenos Aires.

Regardless of the hurdles, all three leaders of state have celebrated the agreement and its role in improving business conditions for companies across the region. “The USMCA is the largest, most significant, modern and balanced trade agreement in history,” said Trump after the signing. Meanwhile, Trudeau stated “the new agreement lifts the risk of serious economic uncertainty that lingers throughout a trade renegotiation process.  Uncertainty that would have only gotten worse and more damaging had we not reached a new NAFTA.”

“Despite the advances in our trade relationship over the past two decades, there was still much to do to take advantage of the potential of each of our countries,” said Peña Nieto. “USMCA gives a new face to our regional integration.” The road toward a new agreement was especially difficult for Mexico, being constantly on Trump’s bad side saying the country was responsible for stealing jobs and investment from the US. The deal became a reality nonetheless, thanks in great measure to Jared Kushner, son-in-law and Senior Advisor to the US President, according to Luis Videgaray, Mexico’s Foreign Relations Minister. “Without Jared Kushner, we would not have a trade relationship with the US nowadays,” he said in an interview. Peña Nieto’s administration went as far as recognizing Kushner with the “Order of the Aztec Eagle,” Mexico’s highest accolade to any foreigner for services to the country and a distinction granted to people like Walt Disney, Queen Elizabeth II, Gabriel García Márquez and Bill Gates. “I know very few people that have done something as significant for Mexico’s relationship with the US (as Jared Kushner),” said Videgaray.

The data used in this article was sourced from the White House, Automotive News, CNN, NBC News and Imagen Noticias.

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

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