US, Mexico, Canada agree on trade pact replacing NAFTA
The new deal United States-Mexico-Canada Agreement updates and replaces the nearly 25-year-old North American Free Trade Agreement, which US President Donald Trump had promised to cancel and turn into a bilateral pact with Mexico.
The United States-Mexico-Canada Agreement (USMCA) updates and replaces the nearly 25-year-old North American Free Trade Agreement (NAFTA), which President Donald Trump had labelled a disaster and promised to cancel.
The rewrite "will result in freer markets, fairer trade and robust economic growth in our region," according to the statement from US Trade Representative Robert Lighthizer and Canada's Foreign Affairs Minister Chrystia Freeland.
"It will strengthen the middle class, and create good, well-paying jobs and new opportunities for the nearly half billion people who call North America home," the joint statement read.
He said he would have more to say on Monday.
"It is a good night for Mexico, and for North America," Mexican Foreign Minister Luis Videgaray tweeted.
US President Donald Trump had threatened to splinter the nearly 25-year-old NAFTA into a bilateral pact with Mexico and tax Canadian vehicle exports to the US if Ottawa had failed to sign on before a midnight Sunday deadline.
Trump blames NAFTA for the loss of American manufacturing jobs and wants major changes to the pact, which underpins $1.2 trillion in annual trade. Markets fear its demise would cause major economic disruption.
Deal comes at cost
Canada had agreed to provide U.S. dairy farmers access to about 3.5 percent of its approximately $16 billion annual domestic dairy market, the sources said, adding that the Canadian government is prepared to offer compensation to dairy farmers hurt by the deal.
The influential Dairy Farmers of Canada lobby group - which strongly opposes the idea - said in a statement that it insisted "any final NAFTA deal should have no further negative impact on the dairy sector."
Canada also agreed to a quota of 2.6 million vehicles exported to the US in the event that Trump imposes 25 percent global autos tariffs on national security grounds, Canadian and the US auto industry sources said.
The quota would allow for significant growth in tariff-free automotive exports from Canada above current production levels of about 2 million units, safeguarding Canadian plants.
Canadian dollar gains strength
The Canadian dollar hit a four-month high on Monday after the deal.
The loonie (CAD=D4) strengthened to C$1.2814 per US dollar, reaching its highest level since late May.