Canada reaches a trade deal with US & Mexico under new name

Canada reaches a trade deal with US & Mexico under new name

The U.S. and Mexico made an agreement in August, putting pressure on Canada to reach a deal as well.

The deal, which still has not been announced, comes after Prime Minister Justin Trudeau called a meeting with his Cabinet late Sunday after Canada and the USA made substantial progress in free trade talks. On dairy the official said Canada essentially gave the US the same access it offered in the Trans Pacific Partnership trade agreement that President Donald Trump rejected.

But it keeps a NAFTA dispute-resolution process that the USA wanted to jettison and offers Canada protection if Trump goes ahead with plans to impose tariffs on cars, trucks and auto parts imported into the United States.

Trump's primary objective in reworking NAFTA was to bring down USA trade deficits, a goal he has also pursued with China, by imposing hundreds of billions of dollars in tariffs on imported goods from the Asian giant.

Last year, the US goods trade deficits with Mexico and Canada were $71.1 billion and $17.5 billion, respectively.

U.S. -Canada talks bogged down earlier this month, and most trade analysts expected the September 30 deadline to come and go without Canada being reinstated.

The Trump administration plans to send the new deal to Congress, starting a 60-day review period before Trump can sign it. Congress can suggest changes during that time.

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The U.S., in turn, has agreed to preserve the "Chapter-19" mechanism for resolving disputes over anti-dumping and anti-subsidy duties, but with some limitations to address American concerns about the tool usurping domestic courts and undermining its sovereignty, the person said.

Among the tough issues that needed to be hashed out between Ottawa and Washington were access to Canada's dairy sector, tariffs and a dispute resolution mechanism that the U.S. wanted to scrap.

Another Canadian channel, CBC, said a "senior source" confirmed that a deal had been reached on significant sections of a new NAFTA.

The agreement also comes after the USA and Mexico came to a separate deal that strengthened rules around auto production in August.

Trade officials for the three countries have been at it for more than a year.

One of the officials said the discussions between Canada and the USA were ongoing, but progress was being made.

Two Ottawa sources directly familiar with the talks said a deal could be very close but stressed some challenging matters had yet to be solved.

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"And frankly we're thinking about just taxing cars coming in from Canada, that's the mother load, that's the big one".

"We agreed to that", Lopez Obrador told reporters in Mexico City. To placate Trump, Mexico agreed in August to provisions that would require 40 percent to 45 percent of a vehicle be built in countries where auto workers earn at least $16 an hour to qualify for NAFTA's duty-free benefits.

The Canadian source said that an exemption will be made for autos, though it's unclear what will happen with the currently-imposed steel and aluminum tariffs.

U.S. business groups opposed turning NAFTA into a bilateral deal because the three nations' economies have become closely intertwined since the original pact came into force in 1994. Lawmakers have said they do not expect Congress to vote on the deal until early next year.

Insiders got wind of a breakthrough just hours before US and Mexican trade authorities were set to publish their own trade agreement without Canada as a signatory.

The deal reportedly grants United States farmers access to the heavily protected dairy market.

Trump has also called NAFTA the "worst trade deal in history".

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