USMCA sends strong signal to China: WH

The signing of a new trade agreement between the US, Mexico and Canada sends a strong signal to China that the Trump administration acts, a senior White House official said Tuesday.

Known as the United States-Mexico-Canada Agreement (USMCA), the new agreement was agreed late Sunday night, after more than a year of tough negotiations to revamp a 24-year-old continental trade pact US President Donald Trump had labelled a disaster.

Trump on Monday declared the new pact with Canada and Mexico to be "a great deal" for all three countries, hailing the replacement of the old North American Free Trade Agreement (NAFTA) which he threatened to cancel.

"Honestly, I think it sends a signal to China that we are acting as one and I think that's very good," White House Chief Economic Advisor Larry Kudlow told reporters.

"There is a trade coalition of the willing that is going to fix a lot of broke areas of international trade getting on the same page and cooperating. And that coalition will stand up to China, their unfair trading practices, their barriers, their Intellectual Property theft. ... You know the story," Kudlow said.

His comments came in response to the question where did the US currently stand with China and what signal he hopes Beijing will take from the trade deal.

Kudlow also suggested that trade agreements made by Japan and the European Union would have a positive impact.

"I don't think it's gotten enough play. The so-called tripartite agreement that was signed in New York at the UN. Ambassador Lighthizer spoke to it ... I think that's very important. The EU, Japan, the US, we're going to send a signal to the Chinese," he said.

"We're not doing this alone. I think President Trump would go it alone, but we're getting a lot of support from our allies and, of course, the North American deal... I hope the Chinese are listening," Kudlow said.

He said the world wanted China to play fair and stop breaking the rules.

"We will talk. We will talk. ... The president's said that. The president, you know, he's on good terms with President Xi (Jinping), so we'll talk," he said.

Kudlow insisted that the US will protect its farmers and workers.

"Well, we want to protect the folks. I mean, we've made that very clear. The farmers they're patriots. They always say to us, 'Trade, not aid'. But we stand as a backstop. We've committed to, I don't know, I think just under USD 5 billion. There could be more if necessary, but this Canadian deal is going to be very helpful," he said.

"It may not affect soybeans. I'm not an expert on the farm economy, it does affect dairy, wheat, and some others, wine I think. I haven't had a drink in 23 years, but wine is in there so that's good... We're going to backstop the farmers, the president's made that very clear.

"But better in the long run to just make good trade deals, market openings. That includes that 'C' word, C-H-I-N-A, market openings," Kudlow said.