US, Canada reach trade deal hours before self-imposed deadline

Canadian Foreign Affairs Minister Chrystia Freeland speaks to the media as she arrives at the Office of the United States Trade Representative Tuesday Sept. 11 2018 in Washington

Canadian Foreign Affairs Minister Chrystia Freeland speaks to the media as she arrives at the Office of the United States Trade Representative Tuesday Sept. 11 2018 in Washington

The US and Canada have reached a deal to reform the North American Free Trade Agreement (Nafta) after last minute negotiations.

The United States and Canada reached a deal on Sunday to salvage NAFTA as a trilateral pact with Mexico, beating a midnight deadline with agreements to substantially boost American access to Canada's dairy market and protect Canada from possible USA auto tariffs, sources with direct knowledge of the talks said.

Mexico agreed to a revamped NAFTA last month, triggering weeks of hectic bargaining with the try to bring Canada into the agreement, as President Donald Trump and other administration officials threatened to go it alone with Mexico if Canada did not make "concessions".

The access to Canada's dairy market will closely mirror what was given under recently negotiated agreements between Canada and the European Union and a separate one with Pacific countries, the Canadian official said.

They suspected that Canada, which had said it wasn't bound by USA deadlines, was delaying the talks until after provincial elections Monday in Quebec, where support for Canadian dairy tariffs runs high.

The U.S. and Canada were under pressure to reach a deal by midnight Sunday, when the U.S. must make public the full text of the agreement with Mexico.

Reuters reported Sunday that Lighthizer and White House adviser Jared Kushner planned to brief Trump on Sunday. Canada will continue to impose severe tariffs on any USA dairy that exceeds the quota.

The agreement also comes after the United States and Mexico came to a separate deal that strengthened rules around auto production in August.

"It will strengthen the middle class, and create good, well-paying jobs and new opportunities for the almost half billion people who call North America home", the two countries' joint statement said.

"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.

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Rouhani earlier said that as a precondition for any dialogue, Trump would need to fix the damage done by exiting the nuclear deal. German Foreign Minister Heiko Maas told reporters there was "strong unity" with Iran on minimising the impact of USA sanctions.

USA stock index futures rose, with S&P 500 Index e-mini futures up more than 0.5 percent, suggesting the benchmark index would open near a record on Monday.

A revised Nafta would be a landmark for Trump, who has called the current deal a "disaster" and vowed to reduce America's yawning trade deficit and revive manufacturing jobs.

The timeline of the notification period has provided urgency to spearhead a NAFTA deal through Congress and onto the desk of Mexican President Enrique Peña Nieto before President-Elect Andrés Manuel López Obrador takes office in December.

And on the matter of Section 232 tariffs, Trump's trade weapon of choice, USA officials say the new deal doesn't address them directly, since they are a matter for the Department of Commerce.

President Donald Trump has approved the developments and the expectation is that an agreement will be announced on Sunday night (Monday morning, Singapore time), according to the people, who spoke on the condition of anonymity.

'Lots of progress, but we're not there yet, ' MacNaughton told reporters.

Negotiators from the three countries began talks about updating NAFTA more than a year ago.

However, Canada has continued to impose high tariffs on dairy products as the country's politically powerful dairy farmers have resisted changes to the high tariffs that protect them from foreign competition.

Lawmakers from the three countries still need to approve the pact. Congress will then have 60 days to review and approve the new deal.

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