Mexico agreed to a revamped NAFTA last month, triggering weeks of hectic bargaining with the U.S.to try to bring Canada into the agreement, as President Donald Trump and other administration officials threatened to go it alone with Mexico if Canada did not make "concessions".
Chevrolet Equinox SUVs are parked awaiting shipment by CN Rail next to the General Motors Co (GM) CAMI assembly plant in Ingersoll, Ontario, Canada October 13, 2017.
A new era in North American free trade dawned in the dead of night Sunday as a 14-month NAFTA modernization effort between Canada, the US and Mexico finally came to fruition with just hours to spare before an end-of-weekend deadline.
Pickup trucks built in both countries will be exempted entirely, the side-letter said.
The deal will preserve a trade dispute mechanism that Canada fought hard to maintain, to protect its lumber industry and other sectors from United States anti-dumping tariffs. Since their agreement was announced in late August, Freeland and theCanadian negotiating team have been back and forth to Washington, D.C. for discussions to try to maintain the trilateral agreement before the USA and Mexico embark on their own trade agreement.
"Specifically, we will seek clarity on how the agreement addresses the existing tariffs on Canadian steel and aluminium, as well as how it will ensure that tariffs and quotas upon Canada's auto sector exports will be avoided", Beatty said.
Reaching a deal would remove a key irritant in the trading relationship between the US and Canada, its top export market.
Daniel Ujczo, a trade attorney with the Dickinson Wright law firm who has followed the talks closely, said he expects the U.S.to get more access to the Canadian dairy market.
It also appears to preserve the key dispute-resolution provisions - Chapter 19 - which allows for independent panels to resolve disputes involving companies and governments, as well as Chapter 20, the government-to-government dispute settlement mechanism.
There was also an agreement to protect 2.6 million exports a year of Canadian vehicles to the United States from possible United States tariffs of 25% that Mr Trump may impose. "It's either going to be the text goes in with Mexico and the US, or the text goes in with all three countries". And only vehicles that failed to meet the rules of origin for auto parts agreed to by the USA and Mexico would even potentially be subject to the proposed auto tariffs.
"We're not getting along with their negotiators", Trump said Wednesday of Canada.
So much American trade depends on the 1994 agreement that USA markets have been jittery about a possible collapse of negotiations - and because Mr. Trump made campaign promises to get rid of the agreement.
Trudeau declined to comment to reporters as he arrived at his office Sunday night ahead of the unusual 10pm meeting with his ministers, which was confirmed by two senior government officials. However, they would also upend North American supply chains and complicate life for USA companies.
Dan Ujzco, an Ohio-based global trade lawyer who'd been briefed on the details, said he expected a detente on the tariff issue to be negotiated separately in the coming days.
Trump has wanted a complete overhaul of NAFTA, arguing the quarter-century-old pact has been unfair to the United States.
"There are several sticking points", Navarro said, adding that he'd recently spoken to the negotiating team that's led by U.S. Trade Representative Robert Lighthizer.
Under the current system, USA imports exceeding quota levels are subject to excessively high tariffs, such as 245 percent for cheese and 298 percent for butter.
The U.S. source said common ground had been reached on all the most hard issues.