Donald Trump terminating NAFTA, negotiating with Canada

U.S. President Donald Trump shakes hands with Mexico's President Enrique Pena Nieto during the their bilateral meeting at the G20 summit in Hamburg Germany

The U.S. and Mexico have apparently agreed that 75 per cent of the content of cars sold must come from the U.S. or Mexico.

"Notwithstanding President Trump's indication that he might finalize a new deal without Canada, a trilateral deal still seems more likely, in our view, and lawmakers on Capitol Hill may deem it essential", ClearView analysts said. So did Canada really think that the US and Mexico were going to sign something alone, or did they see this as a bluff?

Foreign Affairs Minister Chrystia Freeland, emerging Wednesday evening from her second meeting of the day with her USA counterpart, said officials would be working late into the night - and possibly all night - on potential "landing zones" where both parties can agree.

"I continue to be encouraged by the good conversations we are having and the progress we are making", she said while exiting a meeting with Lighthizer, saying the two planned to meet again Wednesday afternoon.

Canada's top diplomat and trade negotiator Chrystia Freeland cut short her trip to Europe to travel to Washington on Tuesday, August 28, to rejoin the talks.

On Monday from the Oval Office, Trump announced the US-Mexico agreement, which would change parts of NAFTA.

The senior official repeated that the new trade agreement is not only better than the existing NAFTA deal, "but also far better than TPP".

The White House said Mr Trump will sign the deal in 90 days.

"Without Canada there can be no new "NAFTA" deal".

Canadian Prime Minister Justin Trudeau said he thought the Friday deadline could be met.

If talks with Canada are not wrapped up by Friday, Trump plans to notify Congress that he intends to sign a deal with Mexico, but would be open to Canada joining, Lighthizer told reporters on Monday. The Trump White House will have to start trying to build support in Congress for its bilateral approach.

"We recognize there is a possibility of getting there by Friday, but it is only a possibility because it will hinge on whether or not there is ultimately a good deal for Canada, a good deal for Canadians", Trudeau said at an event in northern Ontario.

Michigan's agricultural industry is also hoping the USA locks up an agreement with Canada.

Experts say Trump has not specifically set his sights on dismantling supply management, and is more angered with a new classification of milk products that Canada introduced two years ago that he says has undercut USA exports and hurt his country's farmers.

Specifically, Trump called to congratulate Peña Nieto and himself on replacing NAFTA with what Trump called the United States-Mexico Trade Agreement.

"The clearest indicator that the market is viewing the U.S. -Mexico deal as a positive for Canada is the strengthening of the Canadian dollar", Benjamin Reitzes, BMO's Canadian rates and macro strategist, wrote in a note to investors following the announcement. "Mexico reserves the right to reform its energy laws, and it's laid down in writing that Mexico's oil and natural resources belong to the nation", he said. "The appearance of Canada as an irrelevant after-thought in NAFTA is a US frame designed exclusively to wrestle concessions from the Canadian side", says Adam Taylor.

While critics said Canada had been frozen out, Freeland has repeatedly stressed to reporters that she remained in close touch with her U.S. and Mexican counterparts throughout the summer and had already achieved "a high-level agreement with the US" on some the pending issues on autos and labor rights.

The tentative deal would set higher "Made in America" standards for vehicles, boost wages for Mexican workers, keep agricultural products tariff free, increase environmental standards in Mexico, and overhaul rules to protect copyrights and intellectual property. The U.S. -Mexico agreement stipulates a 16-year NAFTA that would be reviewed and possibly extended every six years.

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