Canada has reached a deal with the U.S.to rescue NAFTA, the landmark trade agreement that Donald Trump has called the "worst deal ever", according to multiple reports. Just before Labor Day, Trump sent a notice to Congress of his intention to sign a new trade pact exclusively with Mexico.
According to people briefed on the negotiations, Canada will ease protections on its dairy market and provide access that is similar to what the United States would have gained through the Trans-Pacific Partnership, a trade treaty that Trump withdrew from past year. Canada also wanted to keep a NAFTA dispute-resolution process that the U.S. wanted to jettison.
The Trump administration officially notified Congress of the U.S. -Mexico trade agreement on August 31.
Earlier Sunday, David MacNaughton, Canada's ambassador to the United States, had said there was "lots of progress, but we're not there yet", before heading back to Washington from Ottawa.
In the United States, Congress needed the text of the deal by the late-Sunday deadline if a 60-day review period is to be respected.
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.
Trump had said he wanted to go ahead with a revamped NAFTA - with or without Canada.
"In short, we think this is a fantastic agreement for the USA, but also for Canada and Mexico", said administration officials, who cheered the fact that USA dairy ranchers would soon have "substantial" expanded access to lucrative markets north of the border.
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"Though markets were already anticipating an agreement, one source of worry will be swept away if a deal is made", Yukio Ishizuki, senior currency strategist at Daiwa Securities in Tokyo, said. The two sides were hoping to finalize the pact overnight ahead of an announcement on Monday, The Globe and Mail said. In August a year ago, he started a review of the trade pact with Mexico and Canada that opened up negotiations.
It was unclear whether Canada had secured an exemption from punishing 25-per-cent auto tariffs that U.S. President Donald Trump has threatened against Canadian auto imports, or merely won a limit on the number of autos that could be subject to tariffs once a certain quota of tariff-free vehicles was reached.
The influential Dairy Farmers of Canada lobby group - which strongly opposes the idea - said in a statement that it insisted "any final NAFTA deal should have no further negative impact on the dairy sector".
Current Mexican President Enrique Peña Nieto leaves office November 30 and therefore, the clock was ticking to get the deal done.
Earlier in the evening, President Donald Trump was briefed on the almost finalized negotiations by U.S. Ambassador Robert Lighthizer and White House adviser Jared Kushner.
Trump blames NAFTA for the loss of US manufacturing jobs and wants major changes to the pact, which underpins $1.2 trillion in annual trade.
Canada will open its dairy market further to United States producers, and Washington left unchanged the dispute settlement provisions which Ottawa demanded. And only vehicles that failed to meet the rules of origin for auto parts agreed to by the US and Mexico would even potentially be subject to the proposed auto tariffs. Then it's likely to be taken up in Congress next year.
Auto tariffs would substantially hurt Canada, a major auto exporter.