Asian markets react as new NAFTA deal is struck

After more than a year of lengthy negotiations, the United States and Canada reached a last-minute deal on Sunday night to revamp the North American Free Trade Agreement (NAFTA) and end the economic uncertainty that accompanied the talks.

Renamed the United States-Mexico-Canada Agreement (USMCA), the new pact includes a compromise on issues ranging from access to the dairy sector, automobile tariffs, cultural provisions, and dispute settlement mechanisms, Financial Times reports.

The renegotiated deal could have wide implications. There was a mixed response to the announcement in Asian markets amid fears of a renewed US focus on Chinese trade, Channel News Asia reports.

The primary objective of NAFTA’s renegotiation was to bring down trade deficits, a goal which President Trump is currently pursuing with China, as reported by Nikkei Asian Review. Although the USMCA illuminates a degree of flexibility within the Trump administration when it comes to trade negotiations, it should not be seen as a sign that a breakthrough in the tense US-China trade relations could soon be achieved, CNBC reports.

On the contrary, it could mean prolonged, increasingly tense negotiations with China which, according to Financial Times, is unwilling to concede to the Trump administration’s demands for fundamental structural reforms.

The USMCA will also give President Trump a boost, doing little to discourage him from his current policy course. He hailed the deal as “wonderful and historic” for his strategy of international trade, which includes persistent criticism of previously negotiated trade deals and more restrictive commerce, according to The Guardian.

In a joint statement released on 30 September, the US Trade Representative Robert Lightzier, and Canadian Foreign Affairs Minister Chrystia Freeland declared that the USMCA will create “freer markets, fairer trade and robust economic growth in the region.”