Published: Tue, August 28, 2018
Finance | By Kristine Clayton

U.S., Mexico reach NAFTA breakthrough, clearing way for Canada's return

U.S., Mexico reach NAFTA breakthrough, clearing way for Canada's return

WASHINGTON-In a major advance in NAFTA negotiations, the US and Mexico have come to a preliminary deal on new North American rules for automotive manufacturing and on other key issues, USA news outlets reported on Monday.

"We are starting negotiations with Canada pretty much immediately", Trump said.

Trump, sitting behind the Resolute Desk in the Oval Office, attempted to take a phone call with Mexican President Enrique Peña Nieto to congratulate him on the agreement.

The United States has reached a trade deal with Mexico on Monday while Canada remains on the sidelines of the North American trade talks.

"We hope that Canada can join in now and we expect them to begin that process very soon", the US Trade Representative Robert Lighthizer said on a call with reporters after Trump's announcement.

It was understood that once the USA and Mexico reached an agreement, the third country in NAFTA - Canada - would be brought back in to finalize a revamp of the 24-year-old pact.

Following the July election of Andres Manuel Lopez Obrador, Trump predicted that he will have a "very good relationship" with the newly-elected Mexican president.

The analysis preceded the announcement by U.S. President Donald Trump on Monday that a deal with Mexico has been reached, opening the door for Canada to rejoin negotiations that have dragged on for more than a year.

He added that "given the encouraging announcement today of further bilateral progress between the United States and Mexico, [Foreign Affairs] Minister [Chrystia] Freeland will travel to Washington, D.C., tomorrow to continue negotiations".

Jesus Seade, the NAFTA representative for Mexican president-elect Andres Manuel Lopez Obrador, has predicted that the nations will agree on a softened version of a so-called "sunset clause", an automatic expiration after five years - a key US demand. He even added later in the day that he had "just signed a trade agreement with Mexico", which can not happen without the U.S. first nixing NAFTA. The U.S. plan calls for increased regional content for autos.

NAFTA is blamed for hastening the demise of US manufacturing as automakers and other manufacturers moved factories south of the Rio Grande.

Trump has promised to dismantle (or at least overhaul) the historic agreement for years.

WASHINGTON-The Mexican government agreed to Trump administration demands to weaken key provisions of the North American Free Trade Agreement that allow business and government to challenge other member countries over trade policies. If there were any issues, they could agree to meet on an annual basis to make sure outstanding issues didn't "fester" as one senior White House official put it.

Other key issues are Chapter 19 anti-dumping panels, which the U.S. wants to kill but which may be a deal-breaker for Canada, as well as Canada's protected dairy sector, which Trump is targeting to dismantle.

For that to happen, the US Congress must be notified 90 days in advance, which means the administration must send the notice by the end of the week.

However, the Mexican president said that Canada should now be incorporated into the deal.

Pena Nieto said on Twitter he had spoken to Trudeau late on Sunday and urged Canada to return to the talks with the aim of concluding a three-nation accord "this week".

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