The new trade deal between the United States and Mexico replaces the North American Free Trade Agreement.

But so far, Canada has not agreed to enter the deal.

The US, Mexico and Canada are all facing internal political pressure over the agreement. </s> WASHINGTON (Reuters) - The United States on Monday launched the first salvo in the renegotiation of the 23-year-old North American Free Trade Agreement (NAFTA), saying its top priority for the talks was shrinking the U.S. trade deficit with Canada and Mexico.

FILE PHOTO - A car hauler heading for Detroit, Michigan, drives on the lane to Ambassador Bridge in Windsor, Ontario, Canada on April 28, 2017. REUTERS/Rebecca Cook/File Photo

In a much-anticipated document sent to lawmakers, U.S. Trade Representative Robert Lighthizer said he would seek to reduce the trade imbalance by improving access for U.S. goods exported to Canada and Mexico under the three-nation pact.

For the first time in a U.S. trade deal, the administration also said it wants an “appropriate” provision to deter currency manipulation by trading partners. The move appeared aimed at future trade deals rather than specifically at Canada and Mexico, which are not considered currency manipulators.

The 17-page document asserted that no country should manipulate its currency exchange rate to gain an unfair competitive advantage, an often-cited complaint about China in past years.

Shortly before the release of the document, President Donald Trump lashed out against trade deals and unfair trade practices, saying he would take more legal and regulatory steps during the next six months to protect American manufacturers.

Canadian Minister of Foreign Affairs Chrystia Freeland said the U.S. list was “part of its internal process” although a source familiar with the Canadian government’s thinking said the document was “not earth shattering.”

The source said officials from the United States, Mexico and Canada would meet in Washington on Tuesday to discuss logistics of the talks. No date has been announced for the NAFTA talks, but they are expected in mid-August.

Mexico’s economy ministry said in a statement it would work “to achieve a constructive negotiation process that will allow trade and investment flows to increase and consolidates cooperation and economic integration to strengthen North American competitiveness.”

Speaking on condition of anonymity, a senior Mexican government official said the list of priorities was “not as bad as I was expecting” and welcomed that the United States was not pushing to impose punitive tariffs, as Trump has threatened.

Trade experts have argued that shrinking the yawning U.S. trade deficit will not be achieved through trade deals but rather by boosting U.S. savings.

“The first bullet point shows their preoccupation with bilateral trade deficits and that’s unfortunate,” said Chad Bown, a senior fellow and trade expert at the Peterson Institute for International Economics. “There’s not much that trade policy and trade agreements can do to change those. That’s more of a macroeconomic issue.”

Among the priorities, Lighthizer said the administration would seek to eliminate a trade dispute mechanism that has largely prohibited the United States from pursuing anti-dumping and anti-subsidy cases against Canadian and Mexican firms.

There was no mention of active disputes between the United States and Canada over softwood lumber and dairy products, but the document targeted a range of agricultural non-tariff barriers, including subsidies and unfair pricing structures, that are currently at the heart of those standoffs.

USTR said it would seek to strengthen NAFTA’s rules of origin to ensure that the pact’s benefits do not go to outside countries and to “incentivize” the sourcing of U.S. goods. It offered no details on such incentives and did not specify how much of a product’s components must originate from NAFTA countries.

AUTOMAKERS SUPPORT STANCE

Matt Blunt, president of the American Automotive Policy Council, a group representing U.S. automakers, welcomed the decision to include objectives on the removal of regulatory barriers and the provision on currency manipulation.

A spokesman for Ford Motor Co said: “Foreign currency manipulation is the 21st century trade barrier, and we strongly support the inclusion of this top-tier issue in the U.S. negotiating objectives for NAFTA.”

The document also outlined plans to upgrade standards for labor and the environment and govern digital trade. Canada and Mexico have already agreed to upgrade these areas as part of the defunct Trans-Pacific Partnership trade deal.

Earlier on Monday, AFL-CIO President Richard Trumka said NAFTA had been an “unequivocal failure” and should be completely renegotiated although he stopped short of calling on Trump to abandon the agreement if there was no agreement.

“We will do everything we can to make this a good agreement and to hold the president at his word and make sure we get a renegotiation,” the head of the 12.5-million-strong union umbrella group told a conference call with reporters.

FILE PHOTO - Robert Lighthizer speaks after he was sworn as U.S. Trade Representative during a ceremony at the White House in Washington, U.S. on May 15, 2017. REUTERS/Kevin Lamarque/File Photo

“If it comes out that it is not a good deal, no deal is better than a bad deal,” Trumka said.

NAFTA has quadrupled trade among the three countries, surpassing $1 trillion in 2015, but the U.S. trade deficit with Mexico exceeded $63 billion last year. </s> USMCA: Trump Signs New Trade Agreement With Mexico And Canada To Replace NAFTA

Enlarge this image toggle caption Kevin Lamarque/Reuters Kevin Lamarque/Reuters

Updated at 8:25 a.m. ET

President Trump, Canadian Prime Minister Justin Trudeau and Mexican President Enrique Peña Nieto signed the new U.S. Mexico Canada Agreement — or USMCA — in Buenos Aires Friday, using the backdrop of the G-20 Summit to resolve a trade dispute between America and its closest neighbors.

"Let's go," all three leaders said as they sat alongside each other to sign multiple copies of the deal.

They then shuffled binders around in front of them, to finalize the deal that remakes one of the world's largest free trade zones. When the signing was over, they paused for a photo-op. "Might as well hold that up," Trump said, displaying the fresh signatures as the three leaders sat together.

Despite that and other prodding, Trudeau opted not to follow his peers in holding up his binder to celebrate — a sign, perhaps, of the lingering effects of the contentious process that was triggered when Trump imposed tariffs on Mexico and Canada earlier this year, which remain in place.

The signing event and the leaders' remarks were livestreamed. You can watch the event here.

YouTube

In the lead-up to the signing, Canadian officials had "made it clear they didn't want to celebrate the end of a year of U.S. attempts to twist Canada's arm with the tariffs still in place," the CBC reports. But that wish ran counter to the desires of Trump and Peña Nieto, both of whom have preferred to portray the deal as a victory that helps to cement their legacies.

"This has been a battle, and battles sometimes make great friendships," Trump said at the start of the signing ceremony.

Saying all three countries will benefit from the deal, Trump said of the USMCA, "It is probably the largest trade deal ever made."

The USMCA (read the whole text here) replaces the North American Free Trade Agreement, which had created a free trade zone between the three countries back in 1994. The deal will require ratification by all three countries' legislatures before taking effect.

"The biggest change this deal makes, really, is to the automotive sector," NPR's Scott Horsley reports, "where it does put higher requirements on North American content, and in particular high-wage content, for vehicles to trade duty-free."

The USMCA deal emerged in early October, months after President Trump hit Mexico and Canada with tariffs on their steel and aluminum products. That move set off retaliatory tariffs and intense negotiations to create a new trade pact.

Calling the deal "the new North American Free Trade Agreement, Trudeau said it "lifts the risk of serious economic uncertainty that lingers throughout a trade renegotiation process — uncertainty that would have only gotten worse and more damaging if we had not reached a new NAFTA."

There is more work to be done, Trudeau said, calling the recent announcement that General Motors will close plants in Canada and the U.S. "a heavy blow."

Turning to address Trump, said "And Donald, it's all the more reason why we need to keep working to remove the tariffs on steel and aluminum between our countries."

"General Motors has said that those steel and aluminum tariffs robbed it of a billion dollars in profits in the last year," Scott Horsley reports. In June, GM also warned the Trump administration that new tariffs could result in "a smaller GM."

When it was his turn to speak, Peña Nieto said the trade agreement includes provisions for e-commerce and informational technology — subjects that he said made it necessary to update NAFTA.

"In fact, one-third of the agreement includes topics that were not included in the first agreement," he said.

Peña Nieto also said the USMCA "is the first trade agreement that incorporates elements that address the social impact of international trade; it enables the participation of more sectors in the economy."

Among those provisions, he said, are protections for workers' rights and the environment, and elements that seek to extend the benefits of free trade more broadly.

The signing took place on Peña Nieto's final day in office; Mexico's newly elected president, Andrés Manuel López Obrador, will be sworn in on Saturday.

Shortly before the signing ceremony, Peña Nieto awarded presidential senior adviser and Trump son-in-law Jared Kushner with the Order of the Aztec Eagle, the highest honor Mexico gives to foreigners.

The move "shocked many in Mexico," as NPR's Carrie Kahn reported earlier this week, referring to the outrage and anger that has poured out online.

Later in the G-20 meetings, Trump will turn to another high-profile trade crisis, when he has dinner on Saturday with Chinese President Xi Jinping. </s> WASHINGTON: The United States on Monday launched the first salvo in the renegotiation of the 23-year-old North American Free Trade Agreement (NAFTA), saying its top priority for the talks was shrinking the U.S. trade deficit with Canada and Mexico.

In a much-anticipated document sent to lawmakers, U.S. Trade Representative Robert Lighthizer said he would seek to reduce the trade imbalance by improving access for U.S. goods exported to Canada and Mexico under the three-nation pact.

For the first time in a U.S. trade deal, the administration also said it wants an "appropriate" provision to deter currency manipulation by trading partners. The move appeared aimed at future trade deals rather than specifically at Canada and Mexico, which are not considered currency manipulators.

The 17-page document asserted that no country should manipulate its currency exchange rate to gain an unfair competitive advantage, an often-cited complaint about China in past years.

Shortly before the release of the document, President Donald Trump lashed out against trade deals and unfair trade practices, saying he would take more legal and regulatory steps during the next six months to protect American manufacturers.

Canadian Minister of Foreign Affairs Chrystia Freeland said the U.S. list was "part of its internal process" although a source familiar with Canadian government thinking said the document was "not earth shattering."

Trade experts have argued that shrinking the yawning U.S. trade deficit will not be achieved by revising trade deals but rather by boosting U.S. savings.

"The first bullet point shows their preoccupation with bilateral trade deficits, and that's unfortunate," said Chad Brown, a senior fellow and trade expert at the Peterson Institute for International Economics. "There's not much that trade policy and trade agreements can do to change those. That's more of a macroeconomic issue."

Among the priorities, Lighthizer said the administration would seek to eliminate a trade dispute mechanism that has largely prohibited the United States from pursuing anti-dumping and anti-subsidy cases against Canadian and Mexican firms.

There was no mention of active disputes between the United States and Canada over softwood lumber and dairy products, but the document targeted a range of agricultural non-tariff barriers, including subsidies and unfair pricing structures, that are currently at the heart of those standoffs.

USTR said it would seek to strengthen NAFTA's rules of origin to ensure that the pact's benefits do not go to outside countries and to "incentivize" the sourcing of U.S. goods. It offered no details on such incentives and did not specify how much of a product's components must originate from NAFTA countries.

No date has been announced for the NAFTA talks, but they are expected in mid-August.

Matt Blunt, president of the American Automotive Policy Council, a group representing U.S. automakers, welcomed the decision to include in the list of objectives the removal of regulatory barriers and the provision on currency manipulation.

A spokesman for Ford Motor Co said: “Foreign currency manipulation is the 21st century trade barrier, and we strongly support the inclusion of this top-tier issue in the U.S. negotiating objectives for NAFTA. We look forward to working with the administration to achieve this objective by including strong and enforceable currency prohibitions as part of NAFTA."

The document also outlined plans to upgrade standards for labor and the environment and govern digital trade. Canada and Mexico have already agreed to upgrade these areas as part of the defunct Trans-Pacific Partnership trade deal.

Representative Sander Levin, a Democrat from Michigan, said there was nothing in the document that would change the way Mexico treated its workers.

"Mexico has used their workers having no rights and suppressing labor costs as a key part of their industrial policy," he said, "There is nothing in the summary that assures in these vital aspects that a new NAFTA will be different than the old."

There was no formal reaction to the letter from Mexican government.

Earlier on Monday, AFL-CIO President Richard Trumka said NAFTA had been an "unequivocal failure" and should be completely renegotiated.

"We will do everything we can to make this a good agreement and to hold the president at his word and make sure we get a renegotiation," the head of the 12.5-million strong union umbrella group told a conference call with reporters.

"If it comes out that it is not a good deal, no deal is better than a bad deal," Trumka said.

NAFTA has quadrupled trade among the three countries, surpassing US$1 trillion in 2015, but the U.S. trade deficit with Mexico exceeded US$63 billion last year. </s> Talks between the US and Canada about amending the North American Free Trade Agreement (Nafta) are heading into their final day with no deal in sight.

US President Donald Trump set a Friday deadline for Canada to sign a new agreement with the US and Mexico.

He has threatened to leave Canada on the sidelines since announcing a breakthrough with Mexico on Monday.

However, he and Canadian Prime Minister Justin Trudeau have both said they are hopeful a deal is close.
• Clock is ticking for Canada in US trade negotiations

US Trade Representative Robert Lighthizer is holding talks in Washington with Canadian Foreign Minister Chrystia Freeland aimed at reaching a new deal.

Ms Freeland said on Friday morning that negotiators are "not there yet" on a deal that can be agreed upon by both parties, and that talks would continue later in the day.

"We're looking for a good deal, not just any deal," she said. "And we'll only agree to a deal that is a good deal for Canada.

Issues that have led to discord between the neighbouring countries include Canada's dairy trade rules, dispute-handling mechanisms and patent protections for medicines.

Dairy in particular appeared to be a stumbling block in the negotiations on Friday, with US officials saying Canada had made no concessions on agriculture and Canadian Prime Minister Justin Trudeau saying he was standing firm on the issue.

In off-the-record comments made to Bloomberg on Thursday and leaked to the Toronto Star, Mr Trump said that any deal with Canada would be "totally on our terms".

"Here's the problem. If I say no - the answer's no," he said according to the report.

The president later acknowledged the remarks in a tweet, saying: "At least Canada knows where I stand!"

Mr Trump has threatened to levy tariffs on car parts exported from Canada to the US if a deal is not reached.

The White House wants to notify Congress on Friday that it intends to enter into a new trade agreement, to provide the necessary 90 days' notice that would allow the new Nafta deal to be signed by 1 December, the day Mexico's new left-wing president takes office.

"We are replacing Nafta with a beautiful, brand new US-Mexico trade deal," Mr Trump told supporters in Evansville, Indiana, on Thursday night.

Turning to Canada, he said: "I think it is going to happen and we really have developed a really good relationship. But they have to treat us fairly. They haven't treated us fairly."

Mr Trump has expressed his distaste for multilateral trade agreements on many occasions.

In a 2016 presidential debate with Democratic rival Hillary Clinton, he described Nafta as "the worst trade deal maybe ever signed anywhere" and a "killer" of US jobs.

Once in office he said he wanted to renegotiate - not scrap - the accord, triggering the last year of talks.

What about other trade agreements?

Mr Trump has also threatened to withdraw the US from the World Trade Organization (WTO), saying it treats his country unfairly.

"If they don't shape up, I would withdraw from the WTO," Mr Trump said in an interview with Bloomberg News.
• What is a trade war and should I worry?

The WTO was established to provide rules for global trade and resolve disputes between countries.

Mr Trump says the body too often rules against the US, although he concedes it has won some recent judgments.

Mr Trump's warning about a possible US pull-out from the WTO highlights the conflict between his protectionist trade policies and the open trade system that the WTO oversees.

The US has been embroiled in a tit-for-tat trade battle on several fronts in recent months.

The one creating the most interest is with China, as the world's two largest economies wrangle for global influence. Mr Trump has introduced tariffs on a number of Chinese goods imported into the US.

A third round of tariffs on $200bn (£154bn) of Chinese goods could come as soon as next week, according to a Bloomberg report. Asked to confirm this during the Bloomberg interview, President Trump said that it was "not totally wrong".

China has responded to US tariffs by imposing retaliatory taxes on the same value of US products and has filed complaints against the tariffs at the WTO.
• US-China trade row: What has happened so far?
• Six ways China could retaliate in a trade war
• What is the Trans-Pacific Partnership?

Mr Trump has also turned up the heat on the European Union, rejecting its offer to eliminate car tariffs if the United States does the same.

The proposal was "not good enough", he told Bloomberg. "Their consumer habits are to buy their cars, not to buy our cars."

European Commission chief Jean-Claude Juncker warned on Friday that the EU would respond with tariffs of its own if Mr Trump imposed duties on foreign cars.

Also during his election campaign, Mr Trump railed against the Trans-Pacific Partnership (TPP), a 12-nation trade deal that was a linchpin of President Barack Obama's Asia policy.

Mr Trump said the deal was a "potential disaster for our country".

One of his first acts as president was to withdraw the US from the TTP, although he has since said he might consider rejoining if the terms are "substantially better". </s> They "also discussed relations with China, uranium, and the new NAFTA."

One year ago, Commerce Secretary Wilbur Ross said the tariffs on Canada, as well as Mexico, were necessary to prevent a flood of cheap Chinese steel into the U.S. through its NAFTA partner countries.

Ross also said the U.S. was imposing tariffs on Canada and Mexico because the trade talks were taking too long, even though they were ostensibly imposed under a section of American trade law that gives the president that authority to do that to protect national security.

The Trudeau government has branded the tariffs as illegal, absurd and insulting, while Canada and Mexico say that it will be tough to ratify the new continental free trade agreement — the United States-Mexico-Canada Agreement — if they remain in place.

Ottawa has also been working to demonstrate to Washington that it has taken steps to stem the flow of cheaper Chinese metals into the Canada.

But Canada has stood firm with the U.S. on one key, related point: it has steadfastly refused to agree to quotas or other limits on its exports in order to get the tariffs lifted.

Canadian sources have described the idea of a quota system as a non-starter and a concession that Canada was not prepared to make.

Now, it appears Canadian negotiators have persuaded their American counterparts to accept that position — paving the way for a compromise that could allow the Trump administration to holster one of its favourite new trade weapons, while claiming to have enlisted the help of an ally in its ongoing fight.

"We have always said we are not the problem and that USMCA wouldn't pass as long as the tariffs were in place. We would never accept a hard quota. I think they finally heard us," said one source, speaking on the condition of anonymity, citing the delicate new phase of the current negotiations.

"Now we can work together to deal with over production outside of North America and approve the improved free trade deal."

Dan Ujczo, a trade lawyer and Canada-U.S. specialist in Columbus, Ohio, said he believes the U.S. has "moved off of its demand for a hard quota which is a key factor in the new optimism."

The discussions between the three countries have now moved to creating "enhanced monitoring/anti-circumvention measures" relating to non-North American steel imports.

The three countries are also considering strict new rules of origin for steel and aluminum, said Ujczo.

"Companies that rely on non-North American steel and aluminum in their NAFTA/USMCA region supply chains are highly likely to be impacted by these discussions," he said.

"While companies may celebrate a top-line without a hard quota, the devilment will be in the details."

But Ujczo said caution is warranted before getting too excited: "Trump has not approved any of the proposals. As previously reported, the U.S. and Mexico were near resolution of the Section 232 tariffs in November 2018 only to have the president reject the deal."

Canadian officials are "encouraged" by a pair of conversations in the past week between Trump and Trudeau, as well as Wednesday's Washington meeting between Foreign Affairs Minister Chrystia Freeland and Trump trade czar Robert Lighthizer.

But sources say that after so many false starts about the possible lifting of tariffs, nothing is certain until it actually happens.

"There have been many false starts… we've been close before," said another source, speaking on the condition of anonymity. "We have ramped up efforts recently."

A U.S. Commerce Department review found that imports of automobiles and some parts could hurt U.S. national security, but Trump decided to wait 180 days before imposing tariffs and ordered new talks to deal with the issue.

The Commerce Department reached the same conclusion about Canadian and Mexican steel and aluminum imports almost one year ago.

Freeland to meet Lighthizer, Grassley in Washington to push for tariff removal

Opinion | Why Donald Trump's trade war did not lead to a recession

Steelmakers in Hamilton face flood of cheap imports with federal decision to lift safeguards </s> WASHINGTON (Reuters) - The United States and Mexico agreed on Monday to overhaul the North American Free Trade Agreement (NAFTA), putting pressure on Canada to agree to new terms on auto trade and dispute settlement rules to remain part of the three-nation pact.

Auto stocks soared and the S&P; 500 and the Nasdaq rallied to record highs on the expectation that Canada would sign onto the deal and ease the economic uncertainty caused by U.S. President Donald Trump’s repeated threats to ditch the 1994 accord.

Details of gains and concessions in the deal were only starting to emerge on Monday. 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.

“I think with Canada, frankly, the easiest we can do is to tariff their cars coming in. It’s a tremendous amount of money and it’s a very simple negotiation. It could end in one day and we take in a lot of money the following day,” Trump said.

Trump and Canadian Prime Minister Justin Trudeau discussed trade in a telephone call on Monday and “agreed to continue productive conversations,” White House spokeswoman Sarah Sanders said in a statement.

Negotiations among the three partners, whose mutual trade totals more than $1 trillion annually, have dragged on for more than a year, putting pressure on the Mexican peso MXN= and the Canadian dollar CAD=. Both currencies gained against the U.S. dollar after Monday's announcement.

The political stakes are high for all three countries. Trump and Republicans in the U.S. Congress up for re-election in November want to ensure farmers and other voters whose jobs depend on trade with Canada and Mexico that the deal is sealed.

Mexican President Enrique Pena Nieto wants to sign the agreement before leaving office at the end of November, and Trudeau faces a national election expected by October 2019.

Canadian Foreign Minister Chrystia Freeland is expected to travel to Washington for talks on Tuesday. Her spokesman said Canada would sign only a new agreement that is good for the country.

Trump’s economic adviser, Larry Kudlow, told reporters the deal with Mexico should serve as a “reset” for talks with Canada.

90-DAY WINDOW

If talks with Canada are not wrapped up by the end of this week, Trump plans to notify Congress that he has reached a deal with Mexico, but would be open to Canada joining, U.S. Trade Representative Robert Lighthizer told reporters.

The White House said Trump will sign the deal in 90 days. Congress has to approve it.

“There are still issues with Canada but I think they could be resolved very quickly,” a senior trade official told Reuters in an interview.

Some Republicans in Congress called the deal a positive step but said Canada must be part of the new pact.

Trudeau spoke to Pena Nieto on Sunday and shared their commitment to reaching a successful conclusion of NAFTA “for all three parties,” the prime minister’s office said.

Mexican Foreign Minister Luis Videgaray told a news conference in Washington that if Canada and the United States do not reach an agreement on NAFTA, “we already know that there will still be a deal between Mexico and the United States.”

NEW AUTO RULES

The Mexico-U.S. discussions focused on crafting new rules for the automotive industry, which Trump has put at the heart of his drive to rework a pact he has repeatedly described as a “disaster” for American workers.

Matt Blunt, president of the American Automotive Policy Council, which represents General Motors Co (GM.N), Ford Motor Co (F.N) and Fiat Chrysler Automobiles NV (FCHA.MI), said the group was optimistic about the new deal, though it was still reviewing the details.

U.S. President Donald Trump gets some assistance with a speakerphone call to Mexican President Enrique Pena Nieto to announce a deal to replace the North American Free Trade Agreement (NAFTA) at the White House in Washington, U.S., August 27, 2018. REUTERS/Kevin Lamarque

The deal would require 75 percent of auto content to be made in the NAFTA region, up from the current level of 62.5 percent, a U.S. trade official said. A fact sheet describing the bilateral agreement specified the content would be made in the United States and Mexico.

That requirement could shift some auto parts manufacturing to Mexico from China, a White House official told Reuters, speaking on condition of anonymity.

The Trump administration said the deal improves labor provisions, in part by requiring 40 percent to 45 percent of auto content to be made by workers earning at least $16 per hour.

That measure could move some production back to the United States from Mexico and should lift Mexican wages, the White House official said.

A source in South Korea’s auto industry said many automakers would find it difficult to meet the rule on workers’ wages, which are much cheaper in Mexico. The trade minister said South Korea was analysing the deal’s impact on its auto industry.

Some Japanese automakers could face a similar challenge, but their responses on Tuesday were mostly positive.

“Toyota is pleased to hear that progress is being made by U.S. and Mexico negotiators to reach a consensus on modernizing NAFTA,” the car maker said.

“We are hopeful that any changes are fair and balanced.”

Nissan said it was “encouraged that an agreement was reached, and hope that it appropriately considers the impact on our employees, suppliers and customers.”

The United States relented on its demand for an automatic expiration for the deal, known as a “sunset clause.”

Instead, the United States and Mexico agreed to a 16-year lifespan for the deal, with a review every six years that can extend the pact for 16 years, Lighthizer said.

Slideshow (5 Images)

Mexico agreed to eliminate dispute settlement panels for certain anti-dumping cases, a move that could complicate talks with Canada, which had insisted on the panels.

Monday’s announcement lifted equity markets in all three countries, with shares in automotive companies standing out on relief that the deal appeared to end the uncertainty that has dogged the sector for months.

General Motors Co (GM.N), Ford Motor Co (F.N), and Fiat Chrysler Automobiles NV (FCAU.N) gained between 3.3 percent and 4.8 percent, while Canadian auto parts makers such as Magna International Inc (MG.TO) gained 4.6 percent. </s> President Trump said the United States and Mexico had agreed to revise key parts of the North American Free Trade Agreement and would finalize it within days. His apparent willingness to move on without Canada prompted concern among lawmakers and businesses.

WASHINGTON — President Donald Trump on Monday said the United States and Mexico had reached agreement to revise key portions of the North American Free Trade Agreement and would finalize it within days, suggesting he was ready to jettison Canada from the trilateral trade pact if the country did not get on board quickly.

Speaking from the Oval Office on Monday, Trump touted the preliminary agreement with Mexico as a new trade pact that could replace NAFTA and threatened to hit Canada with auto tariffs if it did not “negotiate fairly.”

“They used to call it NAFTA,” Trump said. “We’re going to call it the United States-Mexico Trade Agreement,” adding that the term NAFTA — which he has called the “worst” trade deal in history — had “a bad connotation” for the United States.

Yet while Trump may want to change the name, the agreement reached with Mexico is simply a revised NAFTA with updates to provisions surrounding the digital economy, automobiles and labor unions. The core of the trade pact — which allows U.S. companies to operate in Mexico and Canada without tariffs — remains intact.

Now, the question becomes whether a trilateral pact becomes a bilateral deal — or if Trump’s threats pressure Canada to return to the negotiating table and accede to many of the United States’ demands.

The president’s apparent willingness to move on without Canada prompted confusion and concern among lawmakers, who said it may not be legally permissible, let alone smart, and businesses whose supply chains depend on a deal encompassing Canada, Mexico and the United States.

“Because of the massive amount of movement of goods between the three countries and the integration of operations which make manufacturing in our country more competitive, it is imperative that a trilateral agreement be inked,” Jay Timmons, president and chief executive of the National Association of Manufacturers, said in a statement.

Mexican officials said Monday that they wanted to have Canada back in the process and were working toward a trilateral deal by the end of the week. Mexican President Enrique Peña Nieto, who joined the White House announcement via phone, said “It is our wish, Mr. President, that now Canada will also be able to be incorporated in all this.”

But later in the day, Luis Videgaray Caso, Mexico’s foreign minister, signaled that Mexico might be willing to move forward without Canada.

“We’ll put all our effort, 24/7, to promote that Canada continues to be a part of this agreement and we work on this extremely hard,” Videgaray told reporters Monday.

Both the Mexicans and Americans have been eager to reach a fully revised NAFTA deal by the end of August, a date that would give the Trump administration enough time to notify Congress that a deal had been finalized and still have that deal be signed by the outgoing Mexican administration of Peña Nieto.

“Ideally we’ll have the Canadians involved,” Robert Lighthizer, the U.S. trade representative, said, adding that the administration planned to officially inform Congress by Friday of its intent to sign a new deal, a step that is required before Congress votes on a trade pact. “If we don’t have Canada involved, we will notify that we have a bilateral agreement that Canada is welcome to join.”

Chrystia Freeland, the Canadian foreign minister, will travel to Washington on Tuesday to continue negotiations, Adam Austen, her spokesman, said Monday.

“We will only sign a new NAFTA that is good for Canada and good for the middle class. Canada’s signature is required,” Austen added.

The revised deal with Mexico makes significant alterations to rules governing automobile manufacturing, in an effort to bring more car production back to the United States from Mexico. Those changes are being watched carefully by the U.S. auto industry, which has expressed concern that the Trump administration’s efforts to rewrite NAFTA could raise prices of U.S.-made cars and trucks. Automakers like General Motors and Ford have set up plants in Canada and Mexico, and U.S. automakers routinely import car parts from other countries.

Under the changes agreed to by Mexico and the United States, car companies would be required to manufacture at least 75 percent of an automobile’s value in North America under the new rules, up from 62.5 percent previously, in order to qualify for NAFTA’s zero tariffs. They will also be required to use more local steel, aluminum and auto parts, and have 40-45 percent of the car made by workers earning at least $16 an hour, a boon to both the United States and Canada and a win for labor unions, which have been among NAFTA’s biggest critics.

“Automakers urge the U.S. and Mexico to quickly re-engage with Canada to continue to build on this progress,” the Alliance of Auto Manufacturers, which represents most carmakers that sell vehicles in the United States, said in a statement. “The industry is hopeful that any changes to NAFTA auto rules of origin continue to strike the right balance by incentivizing production and investment in North America while keeping new vehicles affordable for more Americans.”

In a briefing Monday, administration officials said that the United States and Mexico had also come to an agreement on a controversial “sunset clause,” proposed by the Trump administration, that would cause NAFTA to automatically expire unless the three countries voted to extend it.

The two countries agreed to a review of the trade pact every six years that would extend its lifetime for 16 more years, officials said. That longer time horizon would give lawmakers a chance to review the trade pact’s progress, while also giving businesses certainty for the immediate future.

The countries also came to an agreement that would limit the kinds of legal challenges that investors can currently make against a foreign government under NAFTA. The oil and gas, infrastructure, energy generation and telecom industries are exempted from these more restrictive rules, and will continue under their previous terms, Lighthizer said — a win for those industries.

It is unclear how eager Canada will be to sign on to a deal containing these revisions. But any agreement that does not involve Canada is likely to face legal challenges and intense opposition from Congress, which had granted the Trump administration authority to renegotiate NAFTA as a trilateral deal.

Sen. Orrin Hatch, R-Utah, the chairman of the Senate Finance Committee, said in a statement that improving NAFTA would help U.S. businesses, manufacturers and farmers but that a bilateral deal was not the answer. “To achieve that goal, a final agreement should include Canada,” he said.

“Once again, President Trump is announcing a victory before he has an agreement,” said Rep. Lloyd Doggett, D-Texas. “While avoiding a trade war against Mexico, our #1 Texas trading partner, we cannot secure a complete, improved North American agreement without Canada, our #2 trading partner.”

Sen. Ben Sasse, R-Neb., said “there is reason to worry that this might be a step backward from NAFTA for American families — especially on fundamental issues of presumed expiration of the deal, and empowering government bureaucrats rather than markets to determine the components in cars and other goods.”

Industry groups applauded the progress with Mexico but also said a final agreement must include Canada.

“Coming to terms with Mexico is an encouraging sign, but threatening to pull out of the existing agreement is not,” said Matthew Shay, CEO of the National Retail Federation. “The administration must bring Canada, an essential trading partner, back to the bargaining table and deliver a trilateral deal.”

The president, flanked by advisers including Lighthizer and Jared Kushner, hailed the preliminary agreements as “a big day for our country,” adding that “many people” had thought that no one could make a deal with Mexico.

Peña Nieto, who has at times exchanged harsh words with Trump as the two countries have squabbled over funding for a wall along the border of the two countries, added a moment of praise Monday.

“I recognize your political will,” Peña Nieto said, “and your participation in this.” </s> The leaders of Mexico, Canada and the United States signed a North American trade pact on Friday after brinkmanship over the final details of the deal continued through the eve of the signing.

They agreed on a deal in principle to govern the more than trillion dollars of mutual trade after a year and a half of acrimonious negotiations concluded with a late-night bargain just an hour before a deadline on Sept. 30.

Since then, the three sides have bickered over the wording and the finer points of the deal and still had not agreed just hours before officials were due to sit down and sign it as the G20 summit kicks off in Buenos Aires.

Legislators from the three countries still have to approve the pact, officially known as the United States-Mexico-Canada Agreement (USMCA), before it goes into effect and replaces the North American Free Trade Agreement (NAFTA).

Canadian Prime Minister Justin Trudeau's spokesman only confirmed his attendance late on Thursday. Before signing the deal he continued to refer to as "the New NAFTA," Trudeau told Trump the two should continue to work together to eliminate steel and aluminum tariffs.

Mexico's President Enrique Pena Nieto joined the ceremony on his last day in office.

Trump had vowed to revamp NAFTA during his 2016 presidential election campaign. He threatened to tear it up and withdraw the U.S. completely at times during the negotiation, which would have left trade between the three neighbors in disarray.

Trump forced Canada and Mexico to renegotiate the 24-year-old agreement because he said the existing pact encouraged U.S. companies to move jobs to low-wage Mexico. U.S. objections to Canada's protected internal market for dairy products was a major challenge facing negotiators during the talks, and Trump repeatedly demanded concessions and accused Canada of hurting U.S. farmers.

A side letter to the September agreement showed that Trump preserved the ability to impose threatened 25 percent global tariffs on autos while largely exempting passenger vehicles, pickup trucks and auto parts from Canada and Mexico.

"It's been long and hard. We've taken a lot of barbs and a little abuse, but we got there," Trump said of the pact.

Legislative approval is the next step in the process, but could prove to be a difficult task in the United States, especially now that Democrats – instead of Trump's Republicans – will control the House of Representatives come January. Already Democrats and their allies in the labor movement are demanding changes to the agreement.

While Trump hailed the revised trade pact, Trudeau was more measured, saying there was still work to be done and calling on Trump – using his first name – to remove steel and aluminum tariffs the U.S. imposed on Canada and Mexico. Trudeau also referenced recent downsizing by General Motors in North America as a "heavy blow." Trump did not mention the job losses.

The signing came at the front end of two days of tough diplomacy for Trump. On the top of his agenda is a Saturday dinner meeting with Chinese President Xi Jingping. which will determine if the two can ease escalating trade tensions.

Overhanging the summit in Buenos Aires, the Argentine capital, is a trade dispute between the United States and China, the world's two largest economies, which have imposed tariffs on hundreds of billions of dollars of each other's imports. All eyes will be on a planned dinner between Trump and Chinese President Xi Jinping on Saturday to see whether they can make progress toward resolving differences threatening the global economy.

Beijing hopes to persuade Trump to abandon plans to hike tariffs on $200 billion of Chinese goods to 25 percent in January, from 10 percent at present.

"We hope the U.S. can show sincerity and meet China half way, to promote a proposal that both countries can accept," Foreign Ministry spokesman Geng Shuang told a briefing in Beijing.

Trump faces a series of diplomatic challenges over the weekend, most notably whether he can strike an agreement with Xi.

Before departing Washington on Thursday, Trump said he was "very close" to reaching a deal with China but added "I don't know that I want to do it because what we have right now is billions and billions of dollars coming into the United States in the form of tariffs or taxes."

The U.S. began hiking tariffs on Chinese goods earlier this year and Beijing has responded in a tit-for-tat fashion, sparking tensions that a full trade war could erupt.

Trump increased additional duties imposed on Chinese goods this year from 10 percent to 25 percent next January. The U.S. president also said he is considering levying extra tariffs on another $267 billion worth of Chinese imports should Beijing retaliate.

With his "America First" approach, general distaste for multinational deals and habit of insulting allies, Trump typically gets a mixed reception at global gatherings.

Trump has slapped tariffs on the European Union, pulled the U.S. out of the landmark Paris Climate Accord and the Iran nuclear deal and suggested he might be willing to pull the U.S. out of NATO if member countries don't significantly boost their defense spending.

Ending the NAFTA would have meant tearing up the continent's closely integrated auto supply chain. But Ottawa, Mexico City and Washington have now agreed to sweeping changes to manufacturing and labor requirements that U.S. officials say should boost wages and discourage moving production offshore.

The deal will require that 75 percent of auto content be made in the region, increased from 62.5 percent, and that 40-45 percent be made by workers earning at least $16 an hour.

Mexico also agreed to continue to recognize U.S. auto safety standards, unless Mexican regulators conclude they are inferior to their own standards.

Trump has threatened to use a national security justification to impose steep tariffs on the hundreds of billions of dollars in autos the U.S. imports annually. But the USMCA includes side letters that agree to exempt Mexico and Canada up to a threshold of 2.6 million vehicles a year, as well as an unspecified amount of light trucks, and tens of billions of dollars in auto parts.

However, the new deal does not resolve the punishing steel and aluminum tariffs imposed worldwide earlier this year, and on Mexico and Canada since May.

Canada, which guarantees prices for its dairy producers through its managed supply system, agreed to open its borders a little wider to American milk, cheese, cream, butter and other goods.

The concession from Ottawa removed a major sticking point that Trump said was a deal breaker. Canada will also eliminate categories of low-cost dairy goods and will allow greater imports of U.S. chicken, eggs and turkey.

The U.S. agreed to Canada's insistence that the dispute settlement system – formerly known as Chapter 19 – remain in the deal. Canadian officials resolutely rejected Trump's demand to scrap provisions to resolve disagreements through international arbitration, something Ottawa has successfully used to challenge U.S. tariffs.

However, the agreement does make some changes to the more controversial "Investor-State Dispute Settlement" powers, which critics said had allowed powerful companies and wealthy investors to invalidate local laws and court decisions through unaccountable arbitration.

The new agreement requires that signatories allow equal copyright treatment for writers, composers and others from member countries, requiring a minimum term of the author's life plus 70 years for copyrighted works.

When NAFTA took effect in 1994, e-commerce hardly existed in its current form and modernizing its provisions was a key premise of the talks. The new agreement prohibits customs duties for digitally distributed goods like software and games, e-books, music and movies.

It would also limit local governments' powers to force companies to disclose propriety source code or place restrictions on where data may be stored.

Tucked in the agreement is a provision that appears designed to stop either Canada or Mexico from seeking a better deal with Beijing. If any signatory seeks to enter into a free-trade agreement with a "non-market-economy" – read China – the other parties will then be allowed to cancel the three-country deal and replace it with a bilateral agreement.
The United States and Mexico reach common ground on key trade terms in the North American Free Trade Agreement. Canada has yet to sign off on the agreement.