Nafta: US and Canada reach new trade deal

Nafta: US and Canada reach new trade deal

US President Donald Trump and Canadian Prime Minister Justin TrudeauImage copyright AFP
Image caption Relations between US President Donald Trump and Canadian Prime Minister Justin Trudeau have occasionally been fraught

The US and Canada have reached a deal to reform the North American Free Trade Agreement (Nafta) after last minute negotiations.

The deal is said to involve more US access to Canada’s dairy market and a cap on Canada’s car exports to the US.

Nafta governs more than $1tr (£767bn) in trade between the two and Mexico.

Mexico and the US have already agreed new terms, and only recently it looked as if Canada could be excluded in a final agreement.

“Today, Canada and the United States reached an agreement, alongside Mexico, on a new, modernized trade agreement for the 21st Century: the United States-Mexico-Canada Agreement,” US Trade Representative Robert Lighthizer and Canadian Foreign Affairs Minister Chrystia Freeland said in a joint statement.

The agreement “will give our workers, farmers, ranchers and businesses a high-standard trade agreement that will result in freer markets, fairer trade and robust economic growth in our region.”

What is in the new deal?

The joint US-Canada statement did not include details of the revised terms. However, the deal is expected to contain key provisions on Canada’s dairy industry and car exports to the US.

US farmers will have access to about 3.5% of Canada’s dairy market, Reuters reported, citing sources.

Canada is also reported to have secured some protections for automobile industry against potential US tariffs.

How the deal was reached

The US made a deal with Mexico in August, but relations with Canada over the trade pact had become increasingly strained in recent weeks.

The Trump administration set Sunday as a deadline for Canada to strike a deal.

The US has also been embroiled in a trade war on several fronts this year. US President Donald Trump imposed taxes on imports from Mexico and Canada, and the two countries retaliated.

A protectionist policy under the Mr Trump has seen the US forge ahead with individual trade deals, rejecting bigger multi-lateral trade agreements and posing a challenge to decades of global free trade.

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