NAFTA No More: President Trump Announces United States-Mexico Trade Agreement

Traders work on the floor of the NYSE in New York

Canada will now need to rejoin talks - the USA hadn't invited them for weeks - and sign off on the deal, as well as resolve its own irritants.

"I believe the president is on the phone", Trump said, getting no response.

Trump has repeatedly expressed irritation with Prime Minister Justin Trudeau and with Canadian trade policy in the months since Trump's decision to impose tariffs on imports of Canadian steel and aluminum.

Trudeau has said Canada "will not, cannot" sign on to an auto-terminating deal, which business leaders say would generate the kind of uncertainty trade agreements are supposed to eliminate. He says it will mark the end of the NAFTA name.

"There is still a great deal of uncertainty. trepidation, nervousness - a feeling that we are on the outside looking in", said Peter MacKay, a former Canadian minister of justice, defense and foreign affairs who is now a partner at the law firm Baker McKenzie.

U.S. Secretary Sonny Perdue is expected to release details of a US$12 billion aid package for the country's agriculture sector on Monday to help counter the negative effects of an ongoing trade war between Washington and Beijing that's resulted in stiff retaliatory tariffs against a number of American agricultural products.

Industrial companies, banks and big technology stocks are among the biggest winners in midday trading on Wall Street. If a NAFTA deal isn't signed before then, López Obrador could demand changes - and a deal that took years to negotiate could unravel. General Motors rose 4.3 percent and Ford climbed 2.8 percent.

China trade war escalates with £16bn of new tariffs
And as China has vowed to retaliate further, Trump has threatened to target all $500 billion in goods the USA imports. The list of US products this time includes oil products and coal for the first time, S&P Global Platts reports.

It's unclear if, and when, trilateral talks between Canada, the United States and Mexico would resume. "It's a really good deal for both countries", Trump said.

"Wages are now very low in Mexico and that is one of the reasons that vehicle makers are attracted to the country, the low cost of labour, but it [the new deal] might also affect whether they want to stay in Mexico or go to Asia and the United States", he added.

But several major issues remain unresolved, including US demands to gut the deal's Chapter 19 and 20 dispute resolution provisions, restrict Canadian and Mexican companies from bidding on American government contracts and insert a "sunset clause" that would automatically terminate the deal in five years. A senior United States trade official said there are hopes that a final three-nation accord can be reached by Friday.

"While any news of progress on restoring Nafta certainty is reassuring for American farmers, there are questions that remain on the nature of a final deal", Brian Kuehl, the organisation's executive director, said in a statement.

Yet, CNBC reports the USA softened its position over a sunset clause in the past months of talks. Mexico also agreed to eliminate dispute settlement panels for certain anti-dumping cases, a move that could complicate talks with Canada.

A Canadian Foreign Ministry spokesperson said earlier on Monday that Ottawa was encouraged by "progress" between the USA and Mexico, but cautioned any new version of NAFTA would need to be beneficial for Canada before being signed off on by officials. We're going to call it the United States-Mexico trade agreement.

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