USA and Canada reach deal on NAFTA

USA and Canada reach deal on NAFTA

Privately, some Canadian executives have expressed concerns to the Prime Minister's Office that Canada is spending political capital by tabling issues in trade talks that seem unlikely to resonate with U.S. President Donald Trump, such as gender, workers' rights and climate change, said three sources in business and government who were not authorized to speak about the discussions.

Following the Cabinet meeting, Trudeau said it was "a good day for Canada", while Jesus Seade, the trade negotiator for Mexico's incoming president, tweeted that the deal meant "the door closes on trade fragmentation in the region".

Prime Minister Justin Trudeau called the cabinet meeting inside his office across the street from Parliament Hill, where high-level staff and Freeland had been working over the weekend to secure a NAFTA deal.

The official also says it exempts tariffs on 2.6 million cars and on diary it preserves supply management in Canada and agrees to give similar market access like the Trans Pacific Partnership that Trump scrapped.

Canada and the United States reached a deal Sunday night for Canada to stay in a free trade pact with the USA and Mexico.

In force since 1994, Nafta eliminated tariffs on most goods and governs more than US$1 trillion in trade on the continent. Pierre Lampron, president of Dairy Farmers of Canada, said in a statement.

Some people familiar with the talks credited Trump senior adviser Jared Kushner for helping smooth the path towards a deal.

Earlier this month, Trump went as far as saying he could cause the "ruination" of Canada if he applied a 20% tariff on Canadian automotive exports.

So much American trade depends on the 1994 agreement that USA markets have been jittery about a possible collapse of negotiations - and because Mr. Trump made campaign promises to get rid of the agreement.

In exchange, United States negotiators have agreed to retain Chapter 19, the dispute resolution mechanism of NAFTA, and exemptions for Canadian creative industries.

Canada also appears ready to accept assurances that steel and aluminium tariffs that Trump has imposed will be lifted, though it remains unclear whether the taxes would be replaced by quotas that limit metal imports.

On the matter of Section 232 tariffs, Trump's trade weapon of choice, US officials told a late-night conference call with reporters that the two sides had "reached an accommodation" on the issue.

"We agreed to that", Lopez Obrador told reporters in Mexico City.

"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. "It's a great win for the president and a validation of his strategy in the area of worldwide trade", said one senior USA official.

In August, the United States and Mexico resolved an issue over auto manufacturing, but several sticking points with Canada remained.

Reaching a pact with Canada allows the 24-year-old pact to remain trilateral and for the USA to check another box for its legislative process in the lead up to a congressional vote.

The Trump administration had previously threatened to proceed with an exclusive U.S. -Mexico pact as talks with Canada dragged on amid deep differences over the country's dairy industry and Chapter 19, a mechanism for settling trade disputes. "It provides no certainty for those Canadian businesses that hope to export tariff-free to the U.S. It provides no certainty for those who might invest in Canada".

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