President Donald Trump announced Monday a trade "understanding" with Mexico that could lead to an overhaul of the North American Free Trade Agreement (NAFTA).
Trump made the announcement early Monday in the Oval Office, with Mexican President Enrique Pena Nieto joining by speakerphone.
Trump said the call was held to "celebrate the understanding" the U.S. and Mexico have reached on trade, saying: "It's an incredible deal for both parties."
Trump said the deal will be called the United States-Mexico trade agreement, terminating the 24-year-old NAFTA deal.
Trump has often spoken negatively of the trilateral NAFTA trade deal with Mexico and Canada, calling it the worst trade pact in history.
After the announcement, Pena Nieto thanked Trump for his political will and participation in the deal, but asked that Canada also be included in the agreement.
Trump responded by saying that he would call Canadian Prime Minister Justin Trudeau soon, and that the U.S. would be open to including its northern neighbor in the new deal if it "wants to negotiate fairly."
He said the U.S. could make a separate deal with Canada or add them into the deal with Mexico. Trump also said the U.S. would put tariffs on Canadian cars or reach a negotiated deal with them.
U.S. Trade Rep. Robert Lightizer said the deal will likely be sent to Congress on Friday and signed in November.
About an hour after Trump's announcement, a spokesman for Canada's Foreign Minister Chrystia Freeland said she will travel to Washington on Tuesday to continue efforts to rewrite the NAFTA.
"As we have said all along, progress between Mexico and the United States is a necessary requirement for any renewed NAFTA agreement," Freeland's spokesman Adam Austen said.
But he said Ottawa would "only sign a new NAFTA that is good for Canada and good for the middle class. Canada's signature is required."
Before the president's announcement, Lightizer and Mexican Secretary of Economy Idelfonso Guajardo walked together into the White House without talking to reporters. The delegation also included Jesus Seade, a World Trade Organization veteran tapped by Mexican President-elect Andres Manuel Lopez Obrador as his future chief trade negotiator.
"A big deal looking good with Mexico!" Trump tweeted Monday morning. Earlier, Guajardo told reporters, "There is one very important issue to finish."
U.S. and Mexican negotiators worked over the weekend to narrow their differences.
"There likely will be a deal today," said Daniel Ujczo, a trade attorney with Dickinson Wright PLLC who has followed the NAFTA talks closely.
It was understood that once the U.S. and Mexico reached an agreement, the third country in NAFTA — Canada — would be brought back in to finalize a revamp of the 24-year-old pact. But the countries still must resolve difficult issues, including U.S. complaints about Canada's protection for its dairy farmers and the way disputes are resolved under NAFTA.
Adam Austen, a spokesman for Canadian Foreign Minister Chrystia Freeland, said: "Canada is encouraged by the continued optimism shown by our negotiating partners. Progress between Mexico and the United States is a necessary requirement for any renewed NAFTA agreement."
Austen said the Canadians had been regular contact with the NAFTA negotiators.
"We will only sign a new NAFTA that is good for Canada and good for the middle class," he said, adding that "Canada's signature is required."
NAFTA reduced most trade barriers between the three countries. But Trump and other critics say it encouraged U.S. manufacturers to move south of the border to exploit low-wage Mexican labor.
Talks to overhaul the agreement began a year ago and have proven contentious. The Trump administration wants a higher percentage of auto production to come from within the NAFTA bloc before qualifying for duty-free status.
Talks have also been stymied by the Trump administration's insistence on a "sunset clause" that would end NAFTA in five years unless all three countries agreed to continue it.
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