Mexico and U.S. reach agreement on NAFTA

New Mexico's President Obrador said to be not happy with predecessor deal just before he steps down

Mexico and the United States have reached an agreement on bilateral issues in the renegotiation of the North American Free Trade Agreement (NAFTA) a Mexican source told Reuters, opening the door for Canada to return to the talks.

The U.S.-Mexico deal would require 75 percent of auto content to be made in the United States and Mexico, up from the current level of 62.5 percent, and would require 40 percent to 45 percent of auto content to be made by workers earning at least $16 per hour, a second official said.

Trump called for renegotiating a deal after he had referred to NAFTA as the “worst trade deal in history” because of the massive deficit with Mexico and supposedly unfair conditions.

In 2017, the U.S. bought US$71 billion more imports from Mexico than what Mexico got from the United States. Mexico dramatically increased their farm exports to the U.S. since 1994, the year NAFTA was implemented, and hundreds of thousands of auto-manufacturing jobs have been created.

Farmers and members of the National Zapatista Liberation Army have opposed the deal since the early 1990s citing the detrimental impact it has had on low-scale farmers across the country. Now that the country's politicians and business elite are discussing it again these issues have resurfaced.

President-elect Andres Manuel Lopez Obrador has declared himself a supporter of a more internal market-oriented economy, and admirer of Mexico's import substitution policies.