* Trump calls deal most important ever for United States
* Agreement largely leaves NAFTA trade flows intact
* Automakers see higher costs from high-wage requirements
* Stocks rise; Canadian dollar, Mexican peso gain (Adds analyst quote andautomotive details)By Steve Holland and David LawderWASHINGTON, Oct 1 (Reuters) - President Donald Trump onMonday touted a new trade deal with Canada and Mexico as a winfor U.S. workers while investors breathed a sigh of relief thatthe key pillars of NAFTA had survived his hardball strategy toreshape global commerce.Washington and Ottawa reached an agreement on Sunday afterweeks of tense bilateral talks to update the 1994 North AmericanFree Trade Agreement. The United States had forged a separatetrade deal with Mexico, the third member of NAFTA, in August.The new agreement, called the United States-Mexico-CanadaAgreement (USMCA), is aimed at bringing more jobs into theUnited States, with Canada and Mexico accepting more restrictivecommerce with the United States, their main export customer.
"These measures will support many - hundreds of thousands -American jobs," Trump said at the White House, describing thetrade deal as "the most important" the United States had evermade."It means far more American jobs, and these are high-qualityjobs,"he said. Trump had repeatedly called NAFTA a terribledeal for the United States.Any U.S. job gains are likely years away, but the dealprovides Trump with a victory that he can tout at campaignrallies over the next month on behalf of fellow Republicansrunning in the Nov. 6 congressional elections.But auto industry officials privately said job gains wouldbe more limited, partly because tighter autos content ruleswould raise their costs even as the deal eases worries that theywould have to tear up supply chains and move existing assemblyplants. Praise from the lobbying group representing Ford Motor Co , General Motors and Fiat Chrysler wasmeasured.Matt Blunt, president of the American Automotive PolicyCouncil, called the deal "a workable agreement" achieved througha close relationship between the automakers and U.S.negotiators.Speaking in Ottawa, Canadian Prime Minister Justin Trudeau
said the deal removed uncertainty, but he conceded that Canadahad made some difficult compromises. Canada's dairy industrycriticized him for giving more market access to U.S. imports.
"We had to make compromises, and some were more difficultthan others," Trudeau said at a news conference. "We neverbelieved that it would be easy, and it wasn't, but today is agood day for Canada."Trudeau did win a face-saving preservation of a key tradedispute settlement mechanism to fight U.S. anti-dumping tariffs. Initial U.S. reaction was effusive, with auto workers, dairyfarmers and wheat producers saying the deal would likely createjob opportunities and open up agricultural markets.A NAFTA collapse could have caused U.S. farmers, a key Trumpconstituency, to lose access to major agricultural markets inCanada and Mexico at the same time that China has haltedpurchases of U.S. soybeans and other commodities due to a tariffwar. NAFTA underpins about $1.2 trillion in annual trade betweenits three member countries.U.S., Canadian and Mexican stocks jumped early on Mondaybefore paring gains later. The Canadian dollar strengthened to a four-monthhigh against the U.S. dollar, while the Mexican peso rose to near a two-month high against the greenback.
EYES ON CHINAThe deal ends a major source of trade irritation as theTrump administration pivots to a much bigger fight with China,where U.S. tariffs now are active on $250 billion worth ofChinese goods and threatened on $267 billion more.The head of the International Monetary Fund, ChristineLagarde, issued a new warning on Monday that rising tariffs were dimming the global growth outlook. U.S. Trade Representative Robert Lighthizer has been workingto recruit Japan and the European Union to help pressure Chinato change its trade, subsidy and intellectual propertypractices. With a deal that preserves U.S. market access, Canadaand Mexico now are more likely to join that effort.While Trump's goals for revising NAFTA were to shrink U.S.trade deficits, claw back lost manufacturing jobs and add new IPprotections and digital trade chapters, the new pact leavesNorth American trade flows largely unaltered."The most significant thing about this new deal is that theychanged the name," said David Kelly, chief global strategist forJPMorgan Asset Management. "It really is tweaks to NAFTA."The deal effectively maintains the auto industry's currentfootprint in North America, and spares Canada and Mexico fromthe prospect of U.S. national security tariffs on theirvehicles.Over time it will force auto companies to spend billions ofdollars to produce more of their future products in the UnitedStates or Canada to meet new requirements that 40 percent to 45percent of a vehicle's value content come from high-wage areas.Auto makers, particularly from Europe and Asia, may bepushed to move more of their supply chain into the region. Mexican Economy Minister Ildefonso Guajardo, who led hiscountry's trade negotiations, said the agreement was an attemptto make the region more competitive versus Asia and Europe."Everyone is trying to entrench themselves in their regionto compete with other regions," Guajardo told Mexican radio.Unifor, Canada's biggest private sector union, said the dealwas likely positive for auto workers, as it requires a muchhigher percentage of parts to be made in North America, with asignificant proportion produced in areas paying at least $16 perhour.
STEEL TARIFFS STAYThe deal does not include any changes to separate U.S.tariffs on steel and aluminum levied earlier this year onCanada, Mexico, China, the European Union and others.Trump said the those tariffs - 25 percent on steel and 10percent on aluminum - would remain in place for Canada andMexico until they "can do something different like quotas,perhaps."
"We are not going to allow our steel industry to disappear,"Trump said, adding that Sunday's deal would not have happenedwithout the tariffs.Both Trudeau and Mexican Foreign Minister Luis Videgaraysaid the tariffs needed to be removed before the new trade dealis signed on Nov. 30.Passage of the deal by the U.S. Congress is not expecteduntil the spring of 2019, after November elections could shiftcontrol of the House of Representatives to Democrats fromRepublicans.Some Democrats may be reluctant to give Trump a victory andmay oppose the deal, but some of the deal's stronger rules onlabor, autos and the environment may appeal to more liberalDemocrats, who often opposed free trade deals in the past.Senate Democratic leader Chuck Schumer said Trump "deservespraise for taking large steps" to improve NAFTA, but said hewould judge the deal on U.S. dairy access to Canada and "realenforcement of labor provisions."Mexico's Guajardo on Monday said the new accord could besigned by the three countries' leaders when they meet at a Groupof 20 summit in Buenos Aires in late November.<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^FACTBOX-Details of the new North America free trade deal Trade deal largely spares Canada, Mexico from any Trump autotariffs ANALYST VIEW-In Trump win, Canada, U.S. deal saves NAFTA astrilateral pact BREAKINGVIEWS-NAFTA is dead - long live NAFTA BREAKINGVIEWS-Trump-friendly trade reform is a hard ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Steve Holland and David LawderAdditional reporting by Susan Heavey, Lisa Lambert and inWashington, Frank Jack Daniel in Mexico City and David Ljunggrenin Ottawa; editing by Paul Simao and Leslie Adler)
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