The US Senate on Thursday approved a recasting of the 26-year-old North American Free Trade Agreement, which includes stricter rules on labor and automotive content, but leaves $ 1,2 trillion in annual US- Mexico-Canada virtually unchanged.
Legislation to implement the US-Mexico-Canada Agreement was passed in a 89-10 bipartisan vote, sending the measure to U.S. President Donald Trump for him to sign the law.
The Democratic-controlled U.S. House of Representatives passed the legislation on December 19, after setting out changes to ensure better enforcement of labor rights and stricter environmental rules during months of often controversial negotiations with the Trump administration.
The Senate vote came a day after Trump signed a long-awaited Phase 1 trade deal with China, and just before the Senate formally initiated Trump's impeachment trial on charges that he abused his power.
The U.S. S&P 500 index hit the 3.300 mark on Thursday for the first time, fueled by Morgan Stanley's two trade deals, solid retail sales and optimistic earnings.
U.S. Treasury Secretary Steven Mnuchin said Trump's efforts to rebalance U.S. ties to his main trading partners are bearing fruit and driving U.S. economic growth.
"This historic agreement not only modernizes and rebalances our business relationship with Canada and Mexico, but promotes economic growth, creates jobs and provides crucial certainty for farmers, workers and manufacturers," he said in a statement.
On Wednesday, Mnuchin told Fox News that the interim trade agreement with China and the approval of the USMCA would boost US gross domestic product growth by 50 to 75 basis points.
Mexican President Andrés Manuel Lopez Obrador said on Thursday that approval of the deal is good news for the Mexican economy and predicted that it would boost new investment.
Canada still needs to approve the agreement before it goes into effect and replaces NAFTA. It was signed by the leaders of the United States, Mexico and Canada in September 2018.
Trump made NAFTA's renegotiation a centerpiece of his 2016 election campaign, calling it “the worst trade deal ever made” and blaming him for the loss of thousands of jobs at low-wage US factories in Mexico.
He had threatened to cancel NAFTA completely, unless Congress acted to approve the replacement agreement, causing uncertainty among businessmen and hampering new investments.
The AFL-CIO union federation, which represents about 12,5 million workers in the United States, estimates that about 851.700 jobs in the US have been lost in Mexico because of NAFTA.
Source: Reuters // Featured image: REUTERS / Jose Luis Gonzalez