Trump announces U.S.-Mexico deal he says will replace NAFTA

U.S. President Donald Trump announced a new trade agreement with Mexico Monday that he said will replace the North American Free Trade Agreement.

The Americans are now set to negotiate to see if Canada can be part of it, he said.

Below is an earlier version of this story, now being updated:

As U.S. media reports of a NAFTA breakthrough circulated Monday, Mexico’s economy minister, Ildefonso Guajardo, told reporters on his way into his fifth week of bilateral meetings with the Americans that he still had to conclude a “very important” issue.

Some kind of announcement on tangible progress between two of the three partners working on revisions to the North American Free Trade Agreement was “probably on the agenda,” he suggested.

Despite Guajardo’s comments, the White House tweeted about an hour later that U.S. President Donald Trump will make an announcement on trade at 11 a.m. ET from the Oval Office.

U.S. Trade Representative Robert Lighthizer, Trump’s special advisor Jared Kushner and Guajardo walked into the White House together.

Exactly what kind of announcement they’ll be making remains unclear. The two sides met through the weekend and continued to express optimism that they are close to agreement.

The U.S.–Mexico talks have been trying to make a breakthrough on the deal’s automotive chapter, after talks to redefine what should constitute a tariff-free North American vehicle broke down prior to the Mexican presidential election in July.

Reuters is reporting that the revised rules would require 75 per cent of auto content to be made in the United States and Mexico, up from 62.5 per cent, and 40 per cent to 45 per cent of auto content to be made by workers earning at least $16 per hour.

It’s unclear, however, what will happen to automotive imports from Mexico that do not comply with these new rules. The U.S. tariff for non-NAFTA car imports is currently 2.5 per cent, a rate that does not provide a significant incentive to make costly changes to comply with these new rules.

Officials were hoping to reach an agreement by the end of this month in order to have something signed before the Mexican government changes hands on Dec. 1.

Canada has not been part of the marathon talks.

Freeland in Europe

Foreign Affairs Minister Chrystia Freeland is on government business in Germany, but received updates from both the Americans and the Mexicans throughout the weekend. She has said that Canada’s encouraged by recent reports.

“Progress between Mexico and the United States is a necessary requirement for any renewed NAFTA agreement,” Freeland’s spokesperson, Adam Austen, wrote to CBC News. “We will only sign a new NAFTA that is good for Canada and good for the middle class.”

“Canada’s signature is required,” he said.

Once a U.S.–Mexico agreement is reached, Canada is expected to rejoin the negotiation. Guajardo said Sunday that once Canada returns to the table the three parties would need at least another week of negotiations.

In a tweet prior to Trump’s announcement, outgoing Mexican President Enrique Peña Nieto said he had spoken to Prime Minister Justin Trudeau to express the importance of Canada rejoining the trilateral talks this week.