U.S. and Mexico reach a preliminary trade deal that could replace NAFTA

President Donald Trump speaks during a roundtable discussion on the Foreign Investment Risk Review Modernization Act in the R

USA and Mexican officials are reportedly hoping that the progress they've made will entice Canada, America's No. 2 trade partner, to rejoin the talks, Burrell reported.

The sides also agreed that 40-45 percent of cars must be made at "high wage" factories where workers receive $16 an hour in order to receive duty-free treatment, something that could deter off-shoring USA auto manufacturing to Mexico.

And 40 to 45 percent of the vehicle must be made by workers earning at least $16 per hour.

Canada, Mexico and the United States have been haggling over an update to the North American Free Trade Agreement for over a year now. He says, "We will only sign a new NAFTA that is good for Canada and good for the middle class", adding that, "Canada's signature is required". US Trade Representative Robert Lighthizer said he expects Canada to sign on. Trump threatened he still could put tariffs on Canadian-made cars if Canada did not join its neighbors and warned he expected concessions on Canada's dairy protections. That seems unlikely, although certainly not impossible, before the end of the year, after which a newly elected Congress will take over.

The leaders "had a constructive conversation" on NAFTA, and "look forward to having their teams engage this week with a view to a successful conclusion of negotiations", Trudeau's office said.

Former U.S. ambassador to Canada Bruce Heyman described Donald Trump as "the arsonist that becomes the firefighter" when it comes to the president's dealmaking rhetoric.

"It was indeed a point of tension, of public and notorious differences between Mexico and the United States, but I think that the decision we made not to allow a difference to define the rest of the relationship, that we could see beyond that difference, today is giving very obvious results", Mr Videgaray said in an interview with Bloomberg in Washington.

Trilateral trade between the three countries has exceeded $1tn annually in recent years, according to a 2017 report by the US' Congressional Research Service, with Canada and Mexico ranking in the top three largest buyers from, or suppliers to, the US in 2016.

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"If they'd like to negotiate fairly, we'll do that", he told reporters at an Oval Office press conference on Monday.

Mnuchin also indicated that the US would go ahead with the US-Mexico deal with or without Canadian support. He wasn't authorized by Congress to negotiate a bilateral with Mexico, leaving Canada out in the cold. "The two parties agreed instead to a 16-year pact with a review period after six years".

Under the U.S. Trade Promotion Authority law, known as TPA or "fast track", Mr. Trump must wait 90 days to sign an agreement after notifying Congress of his intention to do so.

While neither of Trump's threats against Canada are new, Ashworth notes the US president has upped the pressure by triggering the six-month NAFTA termination notice.

Negotiations between the United States and Mexico resolved a major stumbling block on auto manufacturing.

The upbeat trade outlook was further boosted by news that Washington was pressuring the European Union to accelerate tariff talks.

"President Trump can say we shouldn't even call this NAFTA, but the president can also say we shouldn't call an animal with a long neck a giraffe".

Under the new agreement with Mexico, 75% of the content in automobiles must be sourced in North America to qualify for tariff-free treatment, up from 62.5% under the current Nafta. Both U.S. and Mexican officials said Monday they are now focused on Canada.

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