US-Mexico trade deal encouraging start for rubber industry leaders 

Washington – President Trump's announcement of a preliminary trade deal with Mexico has garnered plenty of praise from the tire industry and other sectors, but has left many wondering if the pact—designed to supersede the North American Free Trade Agreement—will be expanded to include Canada.

Calling the new agreement "one of the biggest trade deals ever," Trump dubbed it the US-Mexico Trade Agreement, and touted it as a replacement for NAFTA, which he has vowed to eliminate since his 2016 presidential campaign.

"NAFTA has a lot of bad connotations, because it was a rip-off," Trump said during the news conference.

He was noncommittal as to whether Canada would be a part of the new pact, or whether there would be a separate agreement with Canada. However, he did say he would speak to Canadian Prime Minister Justin Trudeau about trade "very soon."

The press conference left many questions unanswered, but a number industry leaders say they were encouraged by the efforts to reform the North American trade pact.

"While we appreciate the progress made by the Trump administration and the Mexican government, we encourage a renewed focus on a three-party agreement that includes Canada," the Motor & Equipment Manufacturers Association said in a statement.

MEMA also expressed concern over a proposed cap of Mexican motor vehicle parts into the US.

"This may serve to decrease American manufacturing jobs and exports and put US businesses at a global disadvantage—all while increasing costs to consumers," it said.

Although Trump did not give a detailed description of the agreement during the news conference, several details were released afterward. Among other things, the proposed deal:

Would be revisited by the US and Mexico after six years, with a possible 16-year extension at that time.

Would require 75% US or Mexican content for every vehicle assembled in both countries, up from the current North American minimum content of 62.5%.

Would stipulate that 40 to 45% of vehicle content must be made by workers making $16 (€13.6) or more per hour.

A White House statement on the agreement also said it would have "strong and effective intellectual property protections," "the strongest disciplines on digital trade of any international agreement," and "the most robust transparency obligations of any US trade agreement."

The White House statement also expressed the Trump administration's disgust with NAFTA, describing it as "outdated and unbalanced."

It blamed the growth of the US goods trade deficit from $115 billion in 1993 to nearly $800 billion in 2017. During the same period, it said the U.S. went from a $1.6 billion trade surplus on goods with Mexico in 1993 to a $70 billion deficit last year.

These figures are consistent with data from the U.S. Census Bureau.

Among other commenters, the US Tire Manufacturers Association expressed hope for a US-Mexico agreement.

"USTMA is very interested in trade policies that support free and fair trade and promote the competitiveness of US tire manufacturing," the association said.

"We will be closely following developments in these negotiations with Mexico, their implications for the broader North American market, including Canada, and the congressional consideration that will follow," it said.

Roy Littlefield IV, director of government relations for the Tire Industry Association, said TIA officials would talk to tire manufacturers before taking an official position on the agreement.

Littlefield said TIA agreed with the statement from the American Petroleum Institute, which said it was encouraged by the preliminary agreement.

"America's natural gas and oil industry depends on trade to continue to grow US jobs and our economy, and deliver our consumers," API said.

The natural gas and oil industry supports 10.3 million jobs in the US and nearly 8% of the US economy, it said.

The National Association of Manufacturers called the preliminary agreement "a step in the right direction."

"It is a positive signal that some form of NAFTA will survive," the NAM said. "Our hope—for the sake of our workers and a successful manufacturing industry here in America—is that the final agreement will include all three of the original signatories: the US, Mexico and Canada."

Current Mexican President Enrique Pena Nieto joined Trump via audio at the press conference. Trump also thanked incoming Mexican President Andres Lopez Obrador for his participation in negotiating the agreement.

Trump said he expected the trade pact to be completed by November.