From the Los Angeles Times

The Trump administration has reached a deal with Mexico on a rewrite of the North American Free Trade Agreement, but the two sides now need a quick buy-in from Canada, which is expected to return to the bargaining table but still has significant issues with some of President Trump’s demands.

The preliminary agreement with Mexico, which includes a tightening of auto rules to increase production in North America, was struck after several weeks of talks and a marathon session over the weekend in Washington.

Trump on Monday announced the deal in the White House, and in front of reporters called Mexico’s outgoing president, Enrique Peña Nieto, to congratulate him on the agreement. Trump, putting Peña Nieto on a speaker in the Oval Office, said the agreement “makes it a much more fair bill.”

Though Trump characterized the agreement as a bilateral deal that will proceed with or without Canada, Peña Nieto said repeatedly he hoped and expected Canada would come on board.

It remained unclear whether Mexico would even sign an agreement without Canada. Despite Trump’s comments earlier, administration officials said in a subsequent conference call that they could not confirm Mexico would agree to a bilateral deal.

Peña Nieto thanked Trump’s chief trade official, Robert Lighthizer, and Jared Kushner, the president’s assistant and son-in-law, who has been interceding during what have been strained bilateral relations, in part because of Trump’s insistence that Mexico pay for a wall along the U.S.-Mexico border to curb illegal immigration.

Trump said the U.S. would be negotiating with Canada “pretty much immediately.” But the president, sticking with his playbook of hardball tactics, suggested that if Canada doesn’t bend to American demands, the U.S. would proceed with a bilateral agreement with Mexico, leaving Canada out. NAFTA has been in force for 24 years.

Moreover, Trump threatened to hit Canada with tariffs on autos if the two sides do not reach a deal.

The United States still has significant unresolved issues with Canada, including Trump’s insistence that Canada open up its dairy market. Referring to Canadian tariffs on dairy, Trump said, “We’re not going to stand for that.”

Overall, the U.S. had a trade surplus with Canada in 2017.

Time is of the essence to bring Canada into the deal.

Mexico and the United States want to have a three-way agreement by the end of this month to allow enough time for Mexico’s parliament to ratify a revamped NAFTA before its new president takes office on Dec. 1. That means a three-way understanding must be reached by Friday.

“It will be difficult, but not impossible, to clear all of these hurdles in a week’s time,” said Daniel Ujczo, a trade lawyer at Dickinson Wright who has been closely monitoring the talks. “It is likely that the three NAFTA parties will reach a ‘handshake’ this week that will start the 90-day procedural countdown required before signing the deal.”

With various procedural requirements, the earliest U.S. lawmakers could vote on the deal would be next year, when a new Congress is seated.

Still, a handshake with Mexico was a welcome development after a year of difficult negotiations and repeated threats from Trump to withdraw from the pact. Stocks rose upon news of the agreement.

Canada has said it is open to resuming talks once the U.S. and Mexico have settled their differences, although Canadian Prime Minister Justin Trudeau also has noted that Canada would not rush to make a deal that was not in its interest.


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