US and Canada agree on last-minute NAFTA deal

A media report cited a high-level American source as saying the two sides had reached an agreement and that a joint statement was expected.

Canada agreed to join a trade pact with the US and Mexico that replaces a quarter-century old tripartite agreement which President Donald Trump had long held was unfair to America.

The flags of Canada, Mexico and the U.S. are seen on a lectern before a joint news conference on the closing of the seventh round of NAFTA talks in Mexico City. (Reuters File Photo)

“The USMCA is a historic transaction!” an exultant Trump tweeted on Monday, referring to the US-Mexico-Canada Agreement which will replace the North American Free Trade Agreement (Nafta) signed by the three neighbours in 1994.

Mexico and the United States had agreed to a bilateral trade pact in August and Trump had said he was willing to go along with that, and it was up to Canada to join the arrangement under renegotiated terms.

“USMCA will give our workers, farmers, ranchers and businesses a high-standard trade agreement that will result in freer markets, fairer trade and robust economic growth in our region,” US trade representative Robert Lighthizer and Canadian foreign minister Chrystia Freeland, the chief negotiators, said in a joint statement released less than 30 minutes before the Sunday deadline. One of the major impacts of the new deal will be on the auto industry. A bulk of the vehicles will be built in North America now and at higher wages, wiping out the advantage that Mexico had earlier.

The US Congress must ratify the pact before it becomes effective, which could become difficult if Democrats win the midterm election in November.

The US private sector, which worried that Trump could leave Canada out, was relieved. “We welcome the announcement that negotiators have reached a deal to modernize Nafta,” said Thomas Donahue, president of the US chamber of commerce.