Official says basis of Canada-US deal reached

Chip Somodevilla  Getty Images North America

Chip Somodevilla Getty Images North America

Trudeau arrived at his office Sunday night but did not comment as he walked by reporters ahead of the unusual late meeting with his ministers.

The three countries reached an agreement to replace the 24-year-old North American Free Trade Agreement, according to a joint statement from U.S. Trade Representative Robert Lighthizer and Canadian Foreign Affairs Minister Chrystia Freeland on Sunday. This one won't be called NAFTA, however.

USA and Canadian negotiators have been negotiating around the clock this weekend to make a Sunday midnight deadline that would allow the countries to sign the deal as the final act before Mexico's outgoing President Enrique Pena Nieto leaves office at the end of November.

Trump threatened to go ahead with a revamped NAFTA - with or without Canada.

Canada late Sunday agreed to join the trade deal that the United States and Mexico announced last month, with a public announcement expected before a self-imposed midnight deadline created to allow the current Mexican president to sign the accord on his final day in office, according to two people familiar with the talks.

While the new United States-Mexico-Canada Agreement (USMCA) avoids tariffs, it will make it harder for global auto makers to build cars cheaply in Mexico and is aimed at bringing more jobs into the United States.

"It's a great win for the president and a validation for his strategy in the area of worldwide trade", a senior administration official told reporters.

Canada, the United States' No. 2 trading partner, was left out when the USA and Mexico reached an agreement last month to revamp the North American Free Trade Agreement.

"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. We look forward to further deepening our close economic ties when this new agreement enters into force".

They thanked their Mexican counterpart, Economy Secretary Ildefonso Guajardo, for his work on the deal.

"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.

"Millions of Canadian jobs rely on having free trade with the USA and Mexico".

Perrin Beatty, the president and CEO of the Canadian Chamber of Commerce, said with a deal like this, it's important to see all of the elements and at this point, details are still limited.

Securing a replacement for the almost 25-year old NAFTA would be a major accomplishment for Trump and his chief trade negotiator, Robert Lighthizer.

However, the prime minister has said throughout the process that his government would not sign a modernized NAFTA just to get a deal.

Officials said they wanted the deal signed before the new Mexican president, left-wing populist Andrés Manuel López Obrador, took office in case he sought changes.

Canada and Mexico are the United States' two biggest export markets. USA officials have been keeping President Donald Trump in the loop on every step since Friday, but there was no plan as of 6 go to the White House to brief him in person, two people said. Although Canadian sources said its government was prepared to offer compensation, dairy farmers reacted angrily.

No substantial changes appear to have been made to the chapter 19 trade dispute settlement mechanism, nor the state-to-state dispute settlement. The federal government had wanted to hold on to that to avoid having disputes settled in USA courts.

Earlier Sunday, David MacNaughton, Canada's ambassador to the United States, had said there was "lots of progress, but we're not there yet", before heading back to Washington from Ottawa.

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