Larry Kudlow: Canada must 'compromise' to get new NAFTA deal

Larry Kudlow: Canada must 'compromise' to get new NAFTA deal

Larry Kudlow: Canada must 'compromise' to get new NAFTA deal

Some lawmakers have said that a bilateral deal would face a higher vote threshold in Congress because the NAFTA fast-track negotiating authority law calls for a trilateral agreement.

Calling the deal "very good" for U.S. farmers and manufacturers, Mr Trump said Mexico has agreed to purchase "as much farm product as possible" immediately.

Mexicans and USA officials have been eager to revise NAFTA by the end of August to give allow the outgoing Mexican administration of Enrique Peña Nieto to sign the deal before leaving office.

Meanwhile, Canadian Foreign Minister Chrystia Freeland rushed back from a European tour to talk trade in Washington with US Trade Representative Robert Lighthizer.

Trump may yet get Canada and Mexico to agree to a new deal, but the announcement Monday was part of the process, not, as Trump seemed to suggest, the end result.

On Monday, the United States and Mexico reached a tentative agreement on updates to the North American Free Trade Agreement. It couldn't immediately be learned whether Canada would accept this US concession. The currency touched its strongest since June 6 at $1.2895.

His new deal with Mexico will revamp the North American Free Trade Agreement (Nafta).

The three nations had hoped to wind up negotiations by the end of this week. And possibly a second bilateral deal with Canada. The Nasdaq Composite gained 21.11 points, or 0.26 per cent, to 8,039.01 at the opening bell.

"Global trade tensions have undoubtedly been the most significant source of risk in 2018", said Hussein Sayed, chief market strategist at FXTM, told Reuters. "These rumored trade provisions would codify the administration's savage attacks on environmental protection, food safety, and consumer rights into trade deals that enshrine and globalize deregulation, making it harder to restore USA environmental and consumer protections once this administration is shown the White House door".

Bill Anderson, director of the University of Windsor's Cross Border Institute, says he's concerned about a condensed negotiation window now that key issues between the USA and Mexico look to be settled, but that the wage provision would help Canada's sector.

Disputes between the U.S. and its trading partners have been a drag on investor sentiment for much of the year despite solid economic fundamentals and two robust quarters of corporate earnings.

Canada will begin negotiations on Tuesday.

Congress still needs to approve the deal in order for it to be finalized.

The toughest battle in the trade war, with China, still looms.

Duty-free access to farm products will also stay in the deal, and Mexico agreed to immediately start buying as many US farm products as possible. These issues kept Chinese shares trading near flat.

Most Mexican auto exports are in a position to comply with the new limits, the country's economy minister said.

"It could be because a dose of reality is sinking in after the initial euphoria", said Mr Mitul Kotecha, senior emerging-markets strategist in Singapore at TD Securities.

The dollar's retreat has allowed currencies such as South Africa's rand and the Australian dollar to rise further from multi-month troughs.

"The devil resides in the details of these corporate-driven free trade deals", she continued, "and we expect that the fine print will include the kind of pro-polluter, pro-fossil fuel industry, pro-Wall Street deregulation that has been a hallmark of Trump's domestic agenda. Canada is fine with this change", Simon Lester, Associate Director of the Center for Trade Policy Studies at the Cato Institute, told DW.

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