The United States and Canada reached a deal on Sunday to salvage NAFTA as a trilateral pact with Mexico, beating a midnight deadline with agreements to substantially boost American access to Canada's dairy market and protect Canada from possible U.S. auto tariffs, sources with direct knowledge of the talks said.
At the start of the process, Canada announced its key objectives in the talks were to get a fair, modernized deal that included stronger labour and environmental protections, as well as entirely new "progressive" chapters on gender and Indigenous rights.
The North American Free Trade Agreement (NAFTA) has hurt Mexicans, Americans, Canadians, Quebecers, and Indigenous peoples.
Canada will open its dairy market further to USA producers, and Washington left unchanged the dispute settlement provisions which Ottawa demanded.
Canadian Foreign Minister Chrystia Freeland, in Ottawa for the negotiations, scrapped plans to give her country's annual address to the U.N. General Assembly on Monday, a spokesman said.
The deal represents a win for Trump, who has derided Nafta for years and threatened to pull the USA from the pact if it was not rewritten in Washington's favour.
Canadian Prime Minister Justin Trudeau has said repeatedly that Chapter 19 is a "red line for Canadians" that can not be crossed.
Trump blames NAFTA for the loss of US manufacturing jobs and wants major changes to the pact, which underpins $1.2 trillion in annual trade.
After weeks of hunkering down in Washington, Freeland and David MacNaughton, Canada's ambassador to the USA, had spent the day in Ottawa taking part in an aggressive, long-distance, last-minute push to get Canada into the trilateral free trade deal ahead of a key congressional deadline.
In addition, it adds provisions to prevent "manipulation" of the trade rules, including covering currency values, and controls over outside countries trying to take advantage of the duty-free market, he said.
Canada's high tariffs on most US dairy products had become the main point of contention that had stalled the negotiations for months, making the prospect of Canada joining the US-Mexico deal, struck in August, increasingly feeble.
Insiders got wind of a breakthrough after 14 months of tumultuous talks and just hours before US and Mexican trade authorities were set to publish their own trade agreement without Canada as a signatory. Vehicles imported to the United States from Mexico contain almost 20 to 30 percent US content.
In a copy of the letter Trump sent to the Speaker of the House of Representatives and to the President of the Senate, Trump said he meant to initiate trade negotiations with both countries, and enter the agreement by the end of November 2018, saying that "dramatic progress" has been made related to several areas.
Trump, who has already imposed tariffs on Canadian steel and aluminum, has also repeatedly threatened to impose even more crippling levies on auto imports if a deal can't get done. The two sides were hoping to finalize the pact overnight ahead of an announcement on Monday, The Globe and Mail said.
They suspected that Canada, which had said it wasn't bound by US deadlines, was delaying the talks until after provincial elections Monday in Quebec, where support for Canadian dairy tariffs runs high.
Because the old agreement was cemented by Congress, and was not a treaty, Mr. Trump would still have to get Congress on board and, under US law, Mr. Trump will have to made the agreement public two months before he can sign it.