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The United States and Mexico reached on Monday a preliminary U.S.-Mexico trade agreement that would be the starting point to modernize the North American Free Trade Agreement (NAFTA), with Canada also joining talks this week.
U.S. President Donald Trump hailed the agreement as “an incredible deal for the workers and for the citizens of both countries.”
“We’re going to call it the United States-Mexico Trade Agreement, and we’ll get rid of the name NAFTA. It has a bad connotation because the United States was hurt very badly by NAFTA for many years,” President Trump said.
After the deal with Mexico was announced, Canada’s Prime Minister Justin Trudeau spoke on the phone with President Trump. “The leaders welcomed the progress that has been made in discussions with Mexico and look forward to having their teams engage this week with a view to a successful conclusion of negotiations,” Trudeau’s office said in a statement.
While the full text and details of the U.S.-Mexico deal have not been published yet, officials from both countries told S&P Global Platts that the new agreement would not significantly change the so-called Investor-state dispute settlement (ISDS) mechanism that gives protection to foreign companies that have invested in the oil and gas industry. The trade deal is expected to provide security for U.S. companies that invest in Mexico’s energy sector, which outgoing President Enrique Peña Nieto opened up for foreign investment in 2013, ending 70 years of state monopoly.
Mexico’s incoming president-elect Andrés Manuel López Obrador, who takes office in December, has been critical of the energy reform and has vowed to review the contracts that foreign firms have already signed with Mexico.
López Obrador welcomed the deal and said, as quoted by Reuters:
“We are satisfied because our sovereignty was saved. Mexico reserves the right to reform its constitution, its energy laws, and it was established that Mexico’s oil and natural resources belong to our nation.”
The president-elect’s designated chief NAFTA negotiator, Jesus Seade, who took part in the latest round of talks with the United States said that Peña Nieto’s negotiators and the United States agreed to change language in the draft about energy that had been “cut and paste” from the text of the Mexican energy reform, but still preserved the same ideas and was consistent with the energy reform.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.