Global Markets Rise As U.S. and Mexico Announce Trade Agreement
As news spread about the U.S.-Mexico agreement, gains were reported across several markets including increases in Europe and China. Auto makers General Motors and Ford Motors rose 4.3 percent, and Fiat Chrysler increased by 2.8 percent.
The United States and Mexico came to a sweeping 16-year preliminary trade deal agreement on Monday as the governments look to replace the North American Free Trade Agreement (NAFTA). President Donald Trump said on Monday that the trade deal will improve economic relations between the two countries, hailing it as a “big day for trade.”
“We’re going to call it the United States/Mexico Trade Agreement,” Trump said, adding that NAFTA “has a bad connotation because the United States was hurt very badly by NAFTA for many years.”
Mexico’s President Enrique Peña Nieto said through a translator that the agreement came after months of negotiations from representatives of both countries. “I think this is something very positive for the United States and Mexico,” Nieto said, before adding that it is “hopeful” that Canada would also join in the agreement.
According to the U.S. Trade Representative’s office, the U.S. and Mexico agreed to increase its regional automotive content to 75 percent, a considerable jump from the current 62.5 percent requirement in NAFTA. The deal also calls for 40 to 45 percent of the production to be done by workers earning at least $16 an hour, which is a big increase for Mexico.
NAFTA is an agreement signed by Canada, Mexico and the United States back in 1994. It prevents the three countries from imposing tariffs on imports from one another. Trump has said on numerous occasions his disapproval of the NAFTA agreement, calling it “the worst deal probably ever signed.”
Trump had also previously stated to top advisers that he would expect more agreements in the future. A trade representative also told Reuters that the trade agreement comes a sunset clause in that a review would be conducted every six years and the opportunity to extend in the future.
Talks regarding Canada’s involvement in the deal were expected this week with Canadian Foreign Minister Chrystia Freeland traveling to Washington on Tuesday. It is expected that Trump could sign the bilateral document as early as Friday, but the agreement would require approval from Congress.
Leah Williams is a Lead Contributor for theDailyLead.