During a phone call on Monday with Mexican President Enrique Peña Nieto, President Donald Trump said that if Canada could not agree to the deal, he would "like to call this deal the US and Mexico Trade Agreement", adding that NAFTA had a "lot of bad connotations".
Trump however said he wanted to drop the name NAFTA, saying it had "bad connotations" because the United States had been hurt by the agreement.
Negotiations centered on revisions to portions of the 1994 North American Free Trade Agreement, notably those involving auto manufacturing, which President Donald Trump has criticized for their imbalances. Once Canada rejoins the talks, there will be at least another week of work, Mexican Economy Minister Ildefonso Guajardo said Sunday, Reuters reported on Sunday.
Canada, which is a part of NAFTA, was not part of the announcement.
Officials said they hope Canada will agree to the terms by Friday, when the White House plans to formally notify Congress that Trump will sign the deal in 90 days.
The breakthrough between the USA and Mexico involved an agreement on the amount of North American content a vehicle must have in orderto pass duty-free across borders. It'll either be a tariff on cars or it'll be a negotiated deal.
Another key part of the new trade deal increases the percentage of a vehicle that must be made in North America to qualify for lower-tariff import into the USA. They will also be required to use more local steel, aluminum and auto parts, and have a certain proportion of the vehicle made by workers earning at least $16 an hour, a boon to both the United States and Canada.
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Without Canada, America's number two trading partner, it's unclear whether any new United States trade agreement with Mexico would be possible.
Negotiations on rewriting the three-country NAFTA agreement began about a year ago.
The United States, Mexico and Canada do more than 1 trillion dollars in trade between them every year.
Prior to Trump's remarks, Canadian Foreign Minister Chrystia Freeland said through a spokesman that "Canada is encouraged by the continued optimism shown by our negotiating partners".
None of that stopped Trump from giving the impression on Monday morning that he was "terminating" NAFTA "and going into this deal" with Mexico. He said the US, which wants Canada to loosen its protection of the supply-managed dairy industry, has not had "market access conversations with Canada of any substance". The recent push for a deal is in part to have it signed before the new president takes office in December.
It remain unclear where Monday's announcement leaves Canada.
She now is on a European trip but Guajardo said last week Freeland had indicated she would be available as soon as the United States and Mexico were ready to move to the next phase.