USA and Mexico reach a preliminary trade deal

Other key issues are Chapter 19 anti-dumping panels, which the US wants to kill but which may be a deal-breaker for Canada, as well as Canada's protected dairy sector, which Trump is targeting to dismantle.

"It's a big day for trade".

U.S., Mexican and Canadian stocks opened higher on Monday on optimism about a trade deal.

Trump said the conference call, which was broadcast live on television on Monday, was being held to "celebrate the understanding" the U.S. and Mexico have reached on trade, calling it "an incredible deal for both parties".

Trump responded by saying that he would call Canadian Prime Minister Justin Trudeau soon, and that the US would be open to including its northern neighbor in the new deal if it "wants to negotiate fairly".

The North American Free Trade Agreement was signed by Canada, Mexico, and the United States in 1993, during the presidency of Bill Clinton. If the U.S.is able to reach a deal with Mexico first, the Trump administration could strong-arm Canada into a disadvantageous deal.

Trump indicated he would take a tough line with Ottawa on autos and dairy tariffs, long a source of tension between the neighboring countries.

The U.S. president made the announcement today in the Oval Office, with Mexican President Enrique Pena Nieto joining by speaker phone.

"There are still issues with Canada but I think they could be resolved very quickly", a senior trade official told Reuters in an interview.

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The 24-year-old trade agreement generally prevents the three parties from imposing tariffs on imports from one another.

President Donald Trump made the announcement on Monday from the White House. He says it will mark the end of the NAFTA name. Nieto said he hoped Canada would soon be incorporated in the revised agreement, while Trump said that remains to be seen.

Guajardo and Videgaray have been shuttling back and forth to Washington for more than a month for meetings with Lighthizer to try to iron out the bilateral stumbling blocks, including rules for the auto market, before the end of August. "I will terminate the existing deal", the president insisted.

The U.S. -Mexico deal would require 75 percent of auto content to be made in the NAFTA region, up from the current level of 62.5 percent, a second U.S. official said.

"Canada's signature is required", spokesman Adam Austen said.

She now is on a European trip but Guajardo said last week Freeland had indicated she would be available as soon as the United States and Mexico were ready to move to the next phase. Perhaps as a hardline negotiating tactic, the president also suggested that the U.S. might hike tariffs on Canadian cars in response, a move that analysts with CIBC markets reported in July could cut Canada's vehicle exports to the United States almost in half, and could throw the manufacturing province of Ontario into recession.

Speaking about Canada, Mr Trump threatened to slap tariffs on Canadian cars if he does not get what he wants.

Under the current law, about 62% of the parts in any vehicle sold in North America must be produced in the region or automakers have to pay import taxes. That requirement would deter U.S. auto manufacturers from moving production to Mexico, where labor costs are lower, something central to Trump's attacks on NAFTA.

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