Trump Celebrates New Trade Deal With Canada And Mexico

Oct 1, 2018
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STEVE INSKEEP, HOST:

President Trump is celebrating a new North American Free Trade Agreement. Canada last night joined the United States and Mexico in this new trade deal. And the president spoke about it in the White House Rose Garden today.

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PRESIDENT DONALD TRUMP: The agreement will govern nearly 1.2 trillion in trade, which makes it the biggest trade deal in the United States' history.

INSKEEP: President continuing to talk now, and NPR White House correspondent Scott Horsley has come over to talk to us about this. Hi, Scott.

SCOTT HORSLEY, BYLINE: Good to be with you, Steve.

INSKEEP: How is this different from NAFTA?

HORSLEY: Well, the name is different, for starters. The president puts a premium on branding, and he wants to rebrand this trade agreement as the U.S.-Mexico-Canada Agreement, or USMCA.

INSKEEP: That doesn't become an acronym as easily as NAFTA.

HORSLEY: It doesn't quite roll off the tongue. We're going to work on the pronunciation. But when NAFTA was negotiated a quarter-century ago, there was a carve-out for Canadian dairy. For example, protectionist measures were left in place for Canadian dairy even as trade barriers generally between the U.S. and Canada and Mexico were lowered. This new agreement does away with some of those protectionist measures so it will give American dairy farmers greater access to the Canadian dairy market. In exchange, Canada got something it wanted, which was to preserve an arbitration system for trade disputes with the United States that they very much wanted to preserve and which the Trump administration wanted to get rid of.

INSKEEP: OK. So there are some things here that Americans can celebrate. People selling agricultural goods to Canada might be very happy with this. There are labor provisions on the Mexican side, right, that would prop up wages in Mexico and therefore, hypothetically, in the United States?

HORSLEY: There are new rules of origin for automobiles which will require that more of a car be made in North America in order to sell duty free in the United States, and in particular require that more of a vehicle's content be made in factories that pay $16 an hour. That could have the effect of raising wages in Mexican auto factories. It could also have the effect of shifting some auto production from Mexico to higher-wage places like the U.S. and Canada. We'll see.

INSKEEP: With that, as someone, Scott, who's covered the White House for years and covered economics for many, many years, is this agreement fundamentally different than it was before?

HORSLEY: I think what we're really seeing is certainly updates to a 25-year-old agreement which didn't take into account digital commerce, for example. This includes some new protections for intellectual property. But really, we're looking here at kind of updates and changes around the margins rather than a wholesale revision of NAFTA.

INSKEEP: So let me ask about that because the president's speaking in the Rose Garden. He said, we're going to bring back manufacturing. He said the previous administration didn't want to, said it was going to go away. That's a false statement. President Obama also promoted American manufacturing of different kinds. I suppose just about every president must. But the president says it's going to happen, there's going to be a lot more manufacturing jobs. Beyond the adjustments to this trade agreement, is there a clear strategy to vastly increase manufacturing jobs in the U.S. from this administration?

HORSLEY: This administration, clearly, is much more willing to pursue protectionist measures to encourage domestic industry of all sorts, whether it's manufacturing or other industry, at the expense of what had for decades been a U.S. commitment to lowering trade barriers elsewhere. For example, the new Korean trade agreement that this administration negotiated is as much about extending trade barriers, say, for U.S.-made made pickup trucks as it is lowering trade barriers in South Korea. So in that sense, there is a strategy. It's not one that necessarily economists across the board think is wise or will encourage economic progress in this country.

INSKEEP: Scott, always a pleasure talking with you. Thank you very much.

HORSLEY: You're welcome.

INSKEEP: That's NPR White House correspondent Scott Horsley. Transcript provided by NPR, Copyright NPR.