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Mexican Senate votes overwhelmingly to ratify USMCA

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Trucks line up to cross into the United States at the border in Tijuana, Mexico. In the first quarter of 2019 the two countries did $203 billion in two-way trade, making Mexico the United States' No. 1 commercial partner for the first time, ahead of Canada and China, according to the Mexican Economy Department. (Associated Press: HANS-MAXIMO MUSIELIK)

MEXICO CITY β€” Mexico’s Senate voted overwhelmingly Wednesday to ratify a new free trade agreement with the United States and Canada, making it the first of the three countries to gain legislative approval.

Mexico’s upper chamber voted 114-4 with three abstentions in favor of the U.S.-Mexico-Canada Agreement, or USMCA. It will replace the North American Free Trade Agreement, or NAFTA, which U.S. President Donald Trump had threatened to withdraw the United States from if Washington did not get a better deal.

Mexican President AndrΓ©s Manuel LΓ³pez Obrador said in a recorded message that the vote was “very good news.”

“It means foreign investment in Mexico, it means jobs in Mexico, it means guaranteeing trade of the merchandise that we produce in the United States,” he said.

The treaty does not need to be approved by Mexico’s lower house. It is still awaiting consideration by lawmakers in the United States and Canada, however.

“Congratulations to President Lopez Obrador β€” Mexico voted to ratify the USMCA today by a huge margin. Time for Congress to do the same here!” Trump tweeted.

U.S. Trade Representative Robert Lighthizer in a statement applauded Mexico’s ratification as “a crucial step forward.”

American Trucking Associations President and CEO Chris Spear praised the Mexican Senate’s approval of USMCA.

American Trucking Associations President and CEO Chris Spear lauded Mexico’s action.

“Mexico’s action in ratifying the USMCA is a critical step forward in putting this important trade agreement in place,” Spear said. “Ensuring free and fair trade with our closest neighbors is critical to the trucking industry, which moves $772.3 billion worth of goods across our borders with Mexico and Canada. β€œTrade with these two countries alone supports nearly 90,000 Americans in trucking-related jobs and generates $12.62 billion in revenue for our industry. We encourage Congress to move forward on ratifying this important agreement so all three nations may continue to share in the benefits that trade creates.”

Ratification of the deal still faces some opposition in the Democrat-controlled U.S. House of Representatives.

One lawmaker pointed directly to partisan politics as the cause of the opposition.

β€œThere’s too much at stake for our farmers to let this opportunity pass by. USMCA will expand economic opportunity in the heartland,” Rep. Darin LaHood, R-Ill., wrote in the Washington Examiner. β€œHowever, as things stand, USMCA is being held hostage by career politicians in Washington who are hell-bent on preventing President Trump from getting a win. A delay in approval of this agreement will hit the wallets of family farms in Illinois and across the country.”

The United States is by far Mexico’s biggest export market and its easy passage through the legislature had been expected. The approval came after Trump threatened to impose tariffs on all Mexican goods if LΓ³pez Obrador didn’t reduce the flow of U.S.-bound illegal immigration from Central America, a threat that was later suspended.

The USMCA was hammered out last year by delegations representing then-President Enrique PeΓ±a Nieto, of the Institutional Revolutionary Party, and then-President-elect LΓ³pez Obrador, of the left-leaning Morena, ensuring that both the outgoing and the incoming administrations were on board. LΓ³pez Obrador took office Dec. 1, a day after the agreement was signed.

Mexican lawmakers had already executed a series of labor reforms that the U.S. had demanded.

Mexico’s economy ministry said that with Senate approval “Mexico sends a clear message in favor of an open economy and of deepening its economic integration in the region.”

Mexico’s peso strengthened moderately against the dollar to 19.03 Wednesday, though the main factor was the U.S. Federal Reserve signaling that it was prepared to cut interest rates if needed to protect the U.S. economy, according to Gabriela Siller, economic analysis director at Banco BASE.

The United States buys about 80% of Mexican exports, some $358 billion worth last year. In the first quarter of 2019 the two countries did $203 billion in two-way trade, making Mexico the United States’ No. 1 commercial partner for the first time, ahead of Canada and China, according to the Mexican Economy Department.

Sen. Ricardo Monreal, leader of the governing party in the Senate, said the vote was “an important step to diminish the existing uncertainty for North American trade.”

 

 

 

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