An agreement leading to a new and revised NAFTA regime could be in place by the end of August
Senior Canadian and US officials have shown a determination to hammer out a new trade agreement to replace the NAFTA framework before the deadline at the end of this month.
The US government imposed a Friday deadline for an agreement with Canada after President Trump had announced a bilateral deal with the outgoing Mexican president, Mr Enrique Pena Nieto, on Monday.
The agreement resolves the major differences between the Mexican and US administrations, especially on the agriculture and automotive sectors. It maintains zero tariffs on agriculture and allows car makers to import vehicles duty free if 75% of their content has been produced in the US or Mexico. The current NAFTA rules mandate 62.5% content made within the trade bloc.
According to sources in the automotive industry, most vehicles produced in Mexico would meet the new content requirements, assuming that Canadian content is not excluded.
Auto makers that feed a higher amount of foreign made components to assembly plants in Mexico face a 2.5% tariff on passenger vehicles and 25% on trucks if they sell these in the US.
Markets have, however, reacted positively to the announcement.