U.S. and Canada reach last-minute deal to preserve NAFTA

Just hours before a midnight deadline, the U.S. and Canadian governments agreed to a deal that would allow United States farmers greater access to Canada's dairy market and address concerns about potential USA auto tariffs, officials from both countries said.

As reported by Bloomberg, unnamed sources close to the talks reveal that the U.S. is "confident" that a deal will be reached between Canada, Mexico, and the United States before a US-imposed deadline of midnight Sunday.

The White House's Peter Navarro said "everybody's speaking in good faith right now as we speak", on Fox Sunday.

"Canadian Prime Minister Justin Trudeau called a meeting with his Cabinet late Sunday", the Associated Press reported Sunday night ahead of the announcement of the new deal.

The two countries are also working on an agreement that would shield Canada if Trump goes ahead with his threat to tax imported cars, truck and auto parts.

In force since 1994, Nafta eliminated tariffs on most goods and governs more than US$1 trillion in trade on the continent.

Negotiators for the USA and Canada were able to overcome major sticking points between the two countries, including Canada's protection of its dairy market and a system for settling trade disputes.

One of the Canadian sources said Ottawa would take nothing for granted until Trump had signed off on a deal.

The news delighted financial markets that had fretted for months about the potential economic damage if NAFTA blew up.

Any agreement requires the approval of both Trudeau and U.S. President Donald Trump.

Mexico agreed to remove NAFTA's Chapter 19, a dispute resolution mechanism for anti-dumping matters, which put Canada in a hard position. "We're doing our best".

A source within the administration told the Times that Canada and Mexico would receive "accommodations" if Trump imposes auto tariffs.

On the matter of Section 232 tariffs, Trump's trade weapon of choice, USA officials told a late-night conference call with reporters that the two sides had "reached an accommodation" on the issue.

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

While Canada had played down the end-of-the-month deadline, the talks were restarted in earnest this weekend as the United States and Mexico signaled they would release text of their bilateral trade agreement as early as Friday.

The U.S. source said it appeared Canada would agree to some kind of quota on how much steel and aluminum it exports to the States, in exchange for the tariffs being lifted.

Under the current system, USA imports exceeding quota levels are subject to excessively high tariffs, such as 245 percent for cheese and 298 percent for butter.

Reaching a deal would remove a key irritant in the trading relationship between the USA and Canada, its top export market.

Trump and Trudeau are expected to sign the agreement in the next 60 days.

The deal is likely to boost global stock markets today, which have been dragged down by concerns about United States trade disputes with China, the European Union and others.

The United States-Mexico-Canada Agreement (USMCA) updates and replaces the almost 25-year-old North American Free Trade Agreement (NAFTA), which President Donald Trump had labeled a disaster and promised to cancel.

U.s. Trade Representative Robert Lighthizer and Kushner were at the USTR office in Washington on Sunday afternoon negotiating final details by conference call with the Canadians in Ottawa.

"They're in the final strokes", said the person, based on information from USA administration officials.