U.S. and Canada reached a deal late Sunday to update the North American Free Trade Agreement, with each side bending on core issues.
The two countries will now join Mexico in updating the 1994 accord, which will be renamed the United States-Mexico-Canada Agreement. Here are highlights of what they agreed to:
Nafta talks were conducted under threat of a steep escalation of tension: imposition of U.S. auto tariffs. The deal struck Sunday offers a measure of protection for both Canada and Mexico, ensuring each country won’t be affected by any auto tariffs unless exports top 2.6 million units annually.
For each, that represents their current exports plus growth of at least 40 percent — enough to mean that if the tariffs are leveled against the rest of the world, they likely wouldn’t hit Canada and Mexico for a couple of years.
There’s no guarantee that the Trump administration will impose the tariffs at all, or keep them in place that long.
As expected, the deal calls for cars to have 75 percent of their content originate in the U.S. and Mexico, up from the current 62.5 percent, and for 40 percent of a car to come from workers whose pay averages more than $16 per hour.
The rules are a central part of the U.S. strategy to rebalance manufacturing to benefit American workers.
2. Other Tariffs
The deal doesn’t resolve the dispute over U.S. tariffs on steel and aluminum imports from Canada and Mexico — or the retaliatory tariffs that each country placed on them.
But going forward, it did give a guarantee that no tariff applied under the same U.S. law could be imposed against Canada or Mexico for at least 60 days.
During that period, “the United States and Canada shall seek to negotiate an appropriate outcome based on industry dynamics and historical trading patterns,” the countries agreed.
3. Dispute Panels
Nafta had three kinds of dispute settlement systems. The new deal will see two remain basically unchanged, but renamed, according to senior White House officials.