US, Canada in last-minute NAFTA deal

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The United States and Canada have reached a last minute deal to salvage the North American Free Trade Agreement, according to people familiar with the negotiations, overcoming deep divisions to keep the 25-year-old trilateral pact intact. On the matter of Section 232 tariffs, Trump's trade weapon of choice, US officials told a late-night conference call with reporters that the two sides had "reached an accommodation" on the issue. I then will submit it for approval to Congress where in theory there should be no trouble, but anything you submit to Congress is trouble.

The Trump administration struck a deal with Mexico last month to rewrite Nafta and had threatened to jettison Canada from the pact if it did not agree to concessions like opening its dairy market to USA farmers.

However, the new agreement has B.C. agreeing to scrap the restrictions that prevent USA wines from also showing up on grocery-store shelves. Farmers have developed export markets in Canada and Mexico. Trump said he spoke to Trudeau by phone and told reporters that their recent tensions didn't affect the deal-making.

The deal will preserve a trade dispute mechanism that Canada fought hard to maintain, to protect its lumber industry and other sectors from U.S. anti-dumping tariffs.

For Trump, the agreement offered vindication for his hardline trade policies that have roiled relations with China, the European Union and America's North American neighbors while causing concerns among Midwest farmers and manufacturers anxious about retaliation.

"It's a good night for Mexico, and for North America", Mexican Foreign Secretary Luis Videgaray said.

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USMCA is said by analysts to be similar to NAFTA in many respects but there is improved access for U.S. agricultural goods, including the dairy products which Canada in particular had tried to limit.

More than two-thirds of Canadian exports go to the United States, equivalent to 20 percent of its Gross Domestic Product, while Canada is the largest export market for the United States. But Dan Ujczo, an global trade lawyer with the USA firm Dickinson Wright, said it would only apply to a very small percentage of vehicles that don't comply with the origin rules.

Trump hasn't made his disdain for NAFTA a secret, calling it the "worst trade deal ever made" and a job-killing "disaster" for the United States.

A senior administration official, who asked not to be named, tells the Post that the deal includes better protection for labor rights, the environment and intellectual property than trade deals made under the Obama administration.

Negotiators from both sides spent two days talking by phone as they tried to settle a range of hard issues such as access to Canada's dairy market and USA tariffs.

"In a sense, we look at this as something that does have a constructive message both for North American trade and for fears around trade wars more broadly", Bruce Kasman, a JP Morgan economist, said.

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Trump tweeted often about how unfair he thought it was that Canada charged such high tariffs on United States dairy products.

Following the Cabinet meeting, Trudeau said it was "a good day for Canada", while Jesus Seade, the trade negotiator for Mexico's incoming president, tweeted that the deal meant "the door closes on trade fragmentation in the region".

Those remarks set the stage for a bitter struggle over trade, with Trump threatening to drop Canada from the regional trade pact altogether if it didn't yield to key USA demands. On Election Day in Quebec, Philippe Couillard put his premier's hat on, to denounce the new worldwide trade agreement.

"Nearly all of the substantive work is finished, with a handful of details being ironed out, the sources said", the Globe&Mail reports.

Orrin Hatch, the Republican chair of the Senate Finance Committee, said he was pleased by the news.

United States farmers will gain access to 3.5% of Canada's dairy market worth $16bn a year, while another requirement stipulates that 40% of components for vehicles produced in the USMCA area must be made in areas paying wages of $16 an hour.

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Steel and aluminum tariffs imposed by Washington, however, will remain.