Will Canada join the new "NAFTA"?
US President Donald Trump has announced a new trade "understanding" with Mexico that could overhaul the existing North American Free Trade Agreement (NAFTA), putting pressure on Canada to agree to new terms on auto trade and other issues in order to remain part of the three-country pact.
"They used to call it NAFTA. We're going to call it the United States-Mexico trade agreement. We'll get rid of the name NAFTA," Trump said, adding that he would call Canadian Prime Minister Justin Trudeau to begin negotiations with the treaty's third party "very soon".
Without Canada, the US' number two trading partner, it's unclear whether any new US trade agreement with Mexico would be possible.
Under Monday's preliminary agreement, Mexico agreed to ensure that 75 percent of automotive content be produced within Mexico and the US, up from the current 62.5 percent, according to the Office of the US Trade Representative. The preliminary deal also says that 40 to 45 percent of the auto content must be made by workers earning at least $16 an hour.
The trilateral treaty has been a key target in Trump's aggressive trade strategy and he has repeatedly threatened to scrap it altogether, branding it a "disaster".
But after a year of intense negotiations to salvage NAFTA, US and Mexican negotiators are eager to seal a new deal before Pena Nieto hands power to President-elect Andres Manuel Lopez Obrador on December 1.
For that to happen, US Congress must be notified 90 days in advance, which means the administration must send the notice by the end of the week.