U.S., Canada reach deal that preserves free trade alliance

WASHINGTON — The United States and Canada reached a last minute deal to salvage the North American Free Trade Agreement late Sunday, overcoming deep divisions to keep the 25-year-old trilateral pact intact.

The deal came after a weekend of frantic talks to try to preserve a trade agreement that has stitched together the economies of Mexico, Canada and the United States but that was in danger of collapsing. After more than a year of tense talks and strained relations between President Trump and Canadian Prime Minister Justin Trudeau, negotiators from both sides reached a deal just before a midnight deadline set by the White House.

The agreement was punctuated by a frenetic Sunday, with Canada’s leaders teleconferencing throughout the day with top U.S. officials in Washington. Trudeau convened a 10 p.m. Cabinet meeting in Ottawa to brief officials on the deal, as Jared Kushner, one of Trump’s closest advisers, and Robert Lighthizer, the president’s top trade negotiator, hashed out the final details.

In a joint statement, Lighthizer and Canada’s foreign affairs minister, Chrystia Freeland, said the new deal “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.”

The agreement, they said, will be called the “United StatesMexico-Canada Agreement” rather than NAFTA.

The deal represents a win for Trump, who has derided NAFTA for years and threatened to pull the United States from the pact if it was not rewritten in America’s favor. The Trump administration struck a deal with Mexico last month to rewrite NAFTA and had threatened to jettison Canada from the pact if it did not agree to concessions like opening its dairy market to U.S. farmers.

As part of the deal, Canada will ease protections on its dairy market and provide access that is greater than what the United States would have gained through the Trans-Pacific Partnership, a trade treaty that Trump withdrew from last year.

The United States relented on its demands to eliminate an independent tariff dispute settlement system that Canada had said was a red line in negotiations. Keeping that process was a major concession for the United States.

The countries also reached an understanding that would protect Canada from the automobile tariffs that Trump has routinely threatened, though it is not clear how far those protections would extend. A senior administration official said that if those tariffs are imposed on global imports, Canada and Mexico would receive “accommodations” for their existing car production.

The agreement builds upon the deal that was reached with Mexico in August, which made alterations to rules governing automobile manufacturing, in an effort to bring more car production back to the United States from Mexico.