• Kyodo


The leaders of the United States, Mexico and Canada on Friday signed a revamped North American Free Trade Agreement, a move that is likely to affect Japanese and other foreign automakers operating in Mexico and Canada.

The accord — called the United States-Mexico-Canada Agreement (USMCA) — requires 75 percent of auto content to be made in the NAFTA region, up from the current level of 62.5 percent, a move that would make it difficult for automakers to use parts produced outside the three countries.

It also obliges 40 to 45 percent of auto content to be made by workers earning at least $16 per hour, a wage level that would reduce incentives for U.S. and foreign carmakers to move jobs to Mexico, a country with low-wage manufacturing labor.

Both changes are designed to encourage more auto production in the United States in a reflection of U.S. President Donald Trump’s “America First” mantra.

“This new deal will be the most modern, up-to-date, and balanced trade agreement in the history of our country, with the most advanced protections for workers ever developed,” Trump said.

He signed the agreement with Mexican President Enrique Pena Nieto and Canadian Prime Minister Justin Trudeau at a ceremony on the margins of a Group of 20 summit in Argentina’s capital, Buenos Aires.

“Today in Argentina, the United States is joining Canada and Mexico to sign a new trade agreement that will better serve the interests of American workers and businesses,” the White House said.

“With the signing of this agreement, President Trump has delivered on his promise to renegotiate NAFTA and protect American farmers, ranchers, businesses, and workers,” it said in a statement.

Trump has condemned the 1994 NAFTA as a “disaster” that has shifted U.S. manufacturing jobs to Mexico.

Speaking at the ceremony, Trudeau referred to the accord as a “new North American Free Trade Agreement” and described it as “modernizing NAFTA,” despite Trump’s preferred branding as USMCA.

Trudeau said he attended the ceremony because the agreement maintains stability for Canada’s economy and removes the dangers associated with Trump’s threat to withdraw the United States from NAFTA.

“The new agreement lifts the risk of serious economic uncertainty that lingers throughout a trade renegotiation process,” he said.

Trudeau urged Trump to lift U.S. tariffs on steel and aluminum imports from Canada.

Nieto, on his last day in office, said that the agreement continues progress toward “an integrated North America with the firm belief that together we are stronger and more competitive.”

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