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United States trade deal with Mexico smashes NAFTA & puts squeeze on Canada

United States trade deal with Mexico smashes NAFTA & puts squeeze on Canada

U.S. Trade Representative Robert Lighthizer said on Monday that Mexico had agreed to eliminate the chapter 19, something that Canada has strongly resisted.

But first, he said, he would give Canada a chance to get back in - "if they'd like to negotiate fairly". He added that he'd call Prime Minister Justin Trudeau "very soon" and start negotiations.

The Australian dollar has risen slightly to 73.5 USA cents, due to a weaker greenback.

The political stakes are high for all three countries.

President Donald Trump hangs up the phone after talking with Mexican President Enrique Pena Nieto, in the Oval Office of the White House, Monday, Aug. 27, 2018, in Washington DC.

Foreign Affairs Minister Chrystia Freeland had planned to be in Europe this week, visiting Germany, France and Ukraine.

"(It) is definitely good news for Mexico and the U.S., but could be good or very bad for Canada", Capital Economics Chief U.S. Economist Paul Ashworth wrote in a note to clients on Monday afternoon.

Speaking about Canada, Mr Trump threatened to slap tariffs on Canadian cars if he does not get what he wants.

Investors are betting President Donald Trump's trade threats against Canada will fizzle out. Congress approved the NAFTA; they would have to approve USA withdrawal, and change a whole slew of us laws that implement the trilateral agreement.

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

Although Carter said he spoke with Canadian officials on television earlier, all of whom were "very concerned" about the future relationship with the us and Mexico, he remained optimistic that an agreement could be struck.

The Mexican leader expressed hope to "renew, modernize and update" NAFTA while Trump's rhetoric indicated he sees that 24-year-old three-nation deal as dead.

Therefore, details and legal language remain subject to further negotiation - which means the final agreement could change significantly.

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 USA trade official said.

On the editorial page of the Rupert Murdoch-owned newspaper, the new agreement - involving Mexico but not Canada - was condemned as "notably worse in many ways", based on what little is known about it. The new deal says at least 40 to 45 percent of automobile content must be made by workers earning at least $16 an hour in an effort to boost American manufacturing.

Senior administration officials pointed to the deal as making both America and Mexico better off.

US automakers have opposed raising the North American content requirement, but the United Auto Workers union has supported it.

"Trade representative Lighthizer said it will still be about three months until the new deal is put into law".

Earlier in the day, a spokesperson for Freeland said: "Canada is encouraged by the continued optimism shown by our negotiating partners".

"We are hopeful that any changes are fair and balanced". If the parties don't come up with a renewal, the agreement would end in 10 years.

The United States relented on its demand for an automatic expiration for the deal, known as a "sunset clause". Alternatively, the White House could just ship the new Mexico deal to Congress-but then lawmakers would be able to substantially rewrite the pact, which could scuttle all the agreements already reached with Mexico. "That provision will not exist", he said Monday, but it was historically a dealbreaker for Canada. It saw shares in Ford rise 3.2 per cent, General Motors 4.6 per cent and Fiat Chrysler 4 per cent.


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