Trump reaches deal with Mexico to replace Nafta with new pact

WASHINGTON • United States President Donald Trump hailed a deal with Mexico to revamp the North American Free Trade Agreement (Nafta) as "a big day for trade", and said that he plans to change the name of a reworked version of the accord.

Mr Trump announced the agreement in a hastily arranged Oval Office event yesterday with Mexican President Enrique Pena Nieto joining by conference call.

Mr Nieto said he is "quite hopeful" that Canada would soon be incorporated in the revised agreement, while Mr Trump said that remains to be seen.

Mr Trump said he planned to end the current Nafta treaty and replace it with the new deal negotiated with Mexico, potentially leaving out Canada.

He added that he would speak with Canadian Prime Minister Justin Trudeau "in a little while", and hoped to begin negotiations "almost immediately".

The peso rose ahead of Mr Trump's remarks. US stocks also advanced, with auto suppliers and rail companies among the top gainers.

There is no deal reached yet with Canada, people familiar with the agreement said. The northern neighbour has been on the sidelines of the talks since last month as Mexico and the US focused on settling differences.

A spokesman for Canadian Foreign Minister Chrystia Freeland issued a statement yesterday that warned against jumping to conclusions.

"Canada's signature is required," spokesman Adam Austen said in an e-mail.

"We will only sign a new Nafta that is good for Canada and good for the middle class", and "we will continue to work towards a modernised Nafta", he added.

Mr Nieto said in a tweet yesterday that he spoke with Mr Trudeau and stressed the importance of Canada rejoining Nafta talks.

Still, an accord between the US and Mexico is the biggest development in talks that began a year ago, punctuated by Mr Trump's repeated threats to quit altogether.

Significant breakthroughs came during the past several days of bilateral talks on cars and energy. The three countries trade more than US$1 trillion (S$1.37 trillion) annually, much of it under the pact.

The agreement with Mexico centres on rules governing the auto industry, resolving a big source of friction, but leaves aside other contentious issues that affect all three countries.

The revised Nafta would also need congressional approval before it can go into effect, including votes by Republican lawmakers who have criticised some of Mr Trump's plans for remaking the deal.

BLOOMBERG, NYTIMES

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A version of this article appeared in the print edition of The Straits Times on August 28, 2018, with the headline Trump reaches deal with Mexico to replace Nafta with new pact. Subscribe