US, Mexico Reach NAFTA Deal and Put Pressure on Canada

Ford Kentucky Truck Plant

White House chief economic adviser Larry Kudlow (3rdR-standing) and Jesus Seade (R), Mexico's President-elect Obrador's representative in trade negotiations look on as US President Donald Trump (L) announces a deal to replace the North American Free Trade Agreement (NAFTA) at the White House in Washington, US, August 27, 2018.

One of the most fundamental parts of Trump's campaign for president was his promise to change America's deeply flawed trade arrangements.

US, Mexican and Canadian stocks opened higher on Monday on optimism about a trade deal. Officials will have to decide whether to succumb to pressure from a joint agreement between the US and Mexico or risk economic insecurity. The three countries trade more than US$1 trillion annually, much of it under the pact. However, while the US and Mexico have reached tentative agreement, they're working under a tight deadline, hoping to have things finalized before Mexican President-elect Andrés Manuel López Obrador is sworn in on December 1.

Canada still needs to join the agreement, and any deal would need to be approved by Congress before it can go into effect. This will be a major boon to American automotive workers and that industry's domestic supply chain.

Companies operating across North America have anxious that some of Trump's demands could hurt the region's economy, especially given the way supply chains and other inter-dependencies between the countries have developed.

The Trump administration said the new "rules of origin" requirements will support billions of dollars in vehicle and parts production in the us each year.

On Monday, they have been proved wrong by an unmitigated victory for the USA. Canadian leaders insist that they are in no hurry to renegotiate the pact or to agree to anything not in their favor. Trump realized the power this gives us and chose to use it to level the playing field for American workers-unlike other recent presidents. Canada has been on the sidelines for the last month, as the US and Mexico have tried to work through their problems. Add Donald Trump as an interest to stay up to date on the latest Donald Trump news, video, and analysis from ABC News.

Canada must now return, hat in hand, for a deal. Therefore, this is not a bilateral deal.

Trump suggested that Canadian tariffs on American dairy products could be a key issue for USA negotiators, and suggested his country could look to target the Canadian auto sector in retaliation.

In order to meet that deadline, negotiators must present Congress with a deal at least 90 days in advance.

Europe a year ago had a $151 billion surplus with the USA. That issue was a key request of the US, which has long wanted Canada and Mexico to raise their de minimis levels. He also threatened to tax Canadian auto imports to increase the pressure on Canada's government.

TRT World's Harry Horton reports. It covers everything from autos to intellectual property to labor rights.

"There are still issues with Canada but I think they could be resolved very quickly", a senior trade official told Reuters in an interview. Now, China is reeling and American is ascendant.

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