BreakingUS, Canada and Mexico sign North America trade deal

Mexico"s President Enrique Pena Nieto, US President Donald Trump and Canada"s Prime Minister Justin Trudeau
(l-r) Mexico"s President Enrique Pena Nieto, US President Donald Trump and Canada"s Prime Minister Justin Trudeau

The US, Canada and Mexico have signed a new trade deal at the G20 summit in Argentina.

Donald Trump, Justin Trudeau and Enrique Pena Nieto took part in signing the pact which is officially known as the United States-Mexico-Canada Agreement (USMCA).

US President Donald Trump had promised to revamp the existing North American Free Trade Agreement or NAFTA during his campaign.

Despite the signing ceremony today, legislators from all three countries still have to approve the pact.

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Jane Foley, senior currency strategist at Rabobank, says that there will be some impact on the US economy from the Trump administration's change in trade policy.

"If you think about the agreement with respect to NAFTA, or the new NAFTA, car prices for instance are likely to go up, workers are likely to be paid a little bit more down in Mexico so there is likely to be some inflationary impact," she says.

But she adds: "This isn't going to have the same sort of effect as we are already seeing in China and have been doing for the last few months."

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Canada's Prime Minister Justin Trudeau meets with steel workers
Canada's Prime Minister Justin Trudeau meets with steel workers

Christophe Bondy, international trade lawyer at Cooley and former trade adviser to the Canadian government, has been telling the Today Programme about USMCA, the new Nafta.

He agreed that it wasn't really a trade deal, more a deal aimed at freer trade.

He said: "You start from a proposition that you want to open the markets and you do that as much as possible, but you are always going to be looking to specific industries within your country that still require or demand certain protections.

"So you’re negotiating as much internally as externally to ensure the freest possible trade in the circumstances.

He added: "The other thing is that a free trade agreement is about these expressed discriminatory barriers – it’s not about regulatory harmonisation that you get within the context of the single market in the EU."

That explains it then.

New Nafta: More expensive cars?

Plenty of reaction to the “new Nafta” trickling out this morning.

President Trump has claimed the deal is a victory for car workers. But consumers could be paying more.

Deborah Elms, executive director of the Asian Trade Centre, told the BBC’s Asia Business Report programme the new trade deal would drive up costs for car makers.

“It’s going to be very expensive to produce a car in Nafta,’ she said

“The local content requirements mean that every part of the car now more or less has to be made in Nafta markets… [and] there’s a labour requirement that you have to use $16-an-hour on average labour for a big portion of that car component.”

“To export from there is going to be very expensive,” she said.

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