US and Canada reach deal on NAFTA

Canada has agreed to sign on to a trade deal between US and Mexico, preserving the three-country North American Free Trade Agreement after more than a year of tortuous negotiations, a US official and a Canadian official told CNN.

Posted: Oct 1, 2018 3:14 PM
Updated: Oct 1, 2018 3:42 PM

President Donald Trump on Monday celebrated his administration's renegotiation of NAFTA, calling the new deal with Canada and Mexico "historic news" that will be a boon for the US economy.

The President attributed the successful renegotiation, which marked the fulfillment of a key campaign promise, to his hard-nosed negotiating tactics and his willingness to impose new tariffs. Reveling in his victory, Trump made clear he will continue to draw from the same playbook -- one that has made Wall Street and top Republicans in Congress queasy -- as he looks to renegotiate trade deals with other countries.

"Without tariffs, we wouldn't be talking about a deal," Trump said. "Just for those babies out there that talk about tariffs -- that includes Congress, 'Please don't charge tariffs' -- without tariffs, we wouldn't be standing here."

US and Canadian officials reached a deal late Sunday night, a month after the US brokered an agreement with Mexico and Trump threatened to exclude Canada from the three-party framework.

"To me the fact that we got a good agreement is all the evidence you need that the President's approach is the good approach, is the right approach. If you're not willing to walk away from an agreement, you're not gonna get one, right?" Lighthizer told reporters after Trump's Rose Garden news conference.

Trump, who has long railed against NAFTA, once again called the original agreement "the worst trade deal perhaps ever made" and described the new US-Mexico-Canada Agreement -- dubbed the USMCA -- as a boon for American farmers, US manufacturing and improve labor standards.

"The factories were leaving, the jobs were leaving, people were being fired," Trump said, describing the old agreement. "We have negotiated this new agreement based on the principle of fairness and reciprocity. To me, it's the most important word in trade."

"This new deal will be the most modern, up-to-date and most balanced trade agreement in the history of our country with the most advanced protections for workers," Trump said during a Rose Garden speech.

Always mindful of the branding, Trump touted the new "USMCA" name.

"It's got a good ring to it," Trump said.

Will Congress approve?

The agreement represents the fulfillment of a signature campaign promise and the brokering of an agreement that just days ago seemed likely to unravel, threatening the decades-old North American free trade framework.

But Trump already appears concerned about the fate of his new trade agreement, wavering between saying he believes the trade agreement will "pass easily" and saying he worries politics will get in the way.

"I plan to sign the agreement by the end of November. 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, no matter what," Trump said. "It's the single greatest agreement ever signed but they'll say, 'Well, Trump likes it, therefore we're not going to approve it because that'll be good for the Republicans, so therefore we can't approve it.' "

He later added he is "not at all confident," saying Democrats "might be willing to throw one of the great deals for the people and the workers -- they may be willing to do that for political purposes."

Trump's US trade representative, though, said he believes the agreement will pass the up-or-down vote in Congress "with a substantial majority."

"I think it's going to pass. And I think it's going to pass with a substantial majority," Lighthizer said, pointing to improved labor standards and environmental protections that Democrats will like.

How it came together

The negotiations between the US and Canada appeared to be going nowhere fast when Trump warned once again last week that he was prepared to exclude Canada from a renegotiated NAFTA agreement.

"It'll probably or possibly be just USM. It'll be United States and Mexico," Trump said at a news conference on Wednesday, days before the Sunday deadline.

But on Friday morning, Trump's senior adviser and son-in-law Jared Kushner got a call from Canadian Prime Minister Justin Trudeau's chief of staff Katie Telford and senior adviser Gerald Butts who wanted to make a final push to reach a deal, two sources familiar close to the negotiations said.

The phone call set into motion a series of phone negotiations over the weekend involving Kushner and US Trade Representative Robert Lighthizer on the US side and the direct involvement of Trudeau's most trusted advisers, leading to an 11th-hour deal late on Sunday night.

US, Canadian and Mexican officials have been working to renegotiate NAFTA for much of Trump's presidency, but the US began negotiating separately with Mexican and Canadian officials in recent months to get past sticking points involving those bilateral trading relationships.

Late last month, the US reached an agreement with Mexico and turned to bringing Canada into the fold, all with Trump threatening to exclude Canada and move forward on a bilateral deal between the US and Mexico.

The two sides struggled to get past key sticking points for weeks after that, but sources credited the phone call from Trudeau's advisers to the Canadians with setting in motion a good faith, in the weeds negotiations to resolve the final hurdles, reinvigorating Lighthizer's negotiations with Foreign Secretary Chrystia Freeland.

Trump was updated on the discussions and giving his feedback through the weekend negotiations, from Friday to Sunday.

But it was Kushner's close relationship with Telford that sources are crediting with getting the US and Canada to this breakthrough.

It's not the first time Kushner's involvement has pushed negotiations past their toughest points. Kushner played a similar role with Mexico -- in that case, his close relationship was with Luis Videgeray, the Mexican foreign secretary, helped propel those talks to fruition.

Kushner and Lighthizer said later on Monday that Trump was deeply involved throughout the process of negotiating with Canada and Mexico.

Lighthizer recounted Trump calling him frequently to ask him about detailed provisions in the agreement throughout the negotiations.

"There's no president I believe that ever knew the details of an agreement like this President," Lighthizer said. "I mean I'd get calls about things ... He was completely engaged, he knew the stuff."

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