The signing ceremony in Mexico City launched what may be the final approval effort for U.S. President Donald Trump’s three-year quest to revamp the 1994 North American Free Trade Agreement (NAFTA), a deal he has blamed for the loss of millions of U.S. manufacturing jobs.

The event at the National Palace was attended by Mexico President Andres Manuel Lopez Obrador, Canadian Deputy Prime Minister Chrystia Freeland, U.S. Trade Representative Robert Lighthizer and U.S. White House adviser Jared Kushner.

The result of a rare show of bipartisan and cross-border co-operation in the Trump era of global trade conflicts, the deal was inked the same day as he became the fourth U.S. president in history to face formal impeachment.

Lighthizer called it “a miracle” that actors from across the political spectrum had come together, calling it a testament to the benefits of the deal. Lopez Obrador credited Trump for working with him, while Freeland celebrated a win for multilateralism.

“We have accomplished this together at a moment when, around the world, it is increasingly difficult to get trade deals done,” she said.

The U.S.-Mexico-Canada Agreement (CUSMA) was signed more than a year ago to replace NAFTA, but Democrats controlling the U.S. House of Representatives insisted on major changes to labour and environmental enforcement before bringing it to a vote.

Delays, led primarily by Democrats and U.S. organized labour, at times threatened to scuttle the deal, creating investment uncertainty in all three countries and worrying U.S. farmers already suffering tariffs stemming from Trump’s trade war with China.

Intense negotiations over the past week among Democrats, the Trump administration and Mexico produced more stringent rules on labour rights aimed at reducing Mexico’s low-wage advantage, including verification of labour compliance at the factory level by independent labour experts.

“It is infinitely better than what was initially proposed by the administration,” House Speaker Nancy Pelosi told a news conference, adding that CUSMA was now ready for a House vote.

Some Mexican business groups fear that Lopez Obrador and his chief negotiator, Deputy Foreign Minister Jesus Seade, have ceded too much, and call the labour verification a violation of Mexican sovereignty.

Seade himself, who signed the deal on Tuesday, said some of the changes were reasonable but not necessarily “good for Mexico.”

Next “they’ll cede the Isthmus of Tehuantepec,” said Gustavo Hoyos, president of employers federation Coparmex and a vocal Lopez Obrador critic, referring to a strategic region of Mexico. He called the government “a bad negotiator.”

Republican and Democratic U.S. lawmakers say there is broad support for revising the trade pact, which encompasses US$1.2 trillion in annual trade across the continent and supports 12 million U.S. jobs and a third of American agricultural exports, backers say.

U.S. House ways and means committee chairman Richard Neal, a Democrat, said sections of the text would be reviewed by lawmakers, but he saw no reason for “unnecessary delays” in bringing the trade pact to a vote on the House floor.

However, in a new wrinkle to swift ratification in the United States, U.S. Senate Majority Leader Mitch McConnell said the Republican-controlled Senate would not take up the deal before congressional recess, potentially pushing the vote into next year.

That seemed to put him at odds with Trump spokeswoman Stephanie Grisham, who said the White House would “push hard” to get the implementing bill passed before year-end.

Trump launched a renegotiation of NAFTA in his first year in office, intent on delivering on his 2016 campaign promise to replace what he has derided as the “worst deal ever.” Canadian and Mexican leaders reluctantly agreed to join the negotiations with their largest trading partner.

“America’s great USMCA Trade Bill is looking good. It will be the best and most important trade deal ever made by the USA. Good for everybody,” Trump tweeted on Tuesday. “Importantly, we will finally end our Country’s worst Trade Deal, NAFTA!”

For Democrats, the deal serves as a retort to Trump’s and Republicans’ assertions that their only agenda was pursuing his impeachment.

In addition to the labour provisions, Democrats said they won elimination of a 10-year data exclusivity period for biologic drugs from the agreement, which they feared would lead to higher U.S. drug prices.

But Pelosi said she lost her bid to remove liability protections for internet service providers, a provision she had called a “giveaway” to big tech companies.

U.S. Trade Representative Lighthizer included a last-minute demand of Mexico for a tighter definition of steel and aluminum in CUSMA’s automotive rules of origin to be “melted and poured” in North America. While CUSMA originally required 70 per cent of the metals used in North American vehicle production come from the region, it did not specify production methods, opening the door to the use of semi-finished metals from China and elsewhere.

Mexico and Canada agreed to a seven-year phase-in of the new standard for steel, industry sources familiar with the deal said. The aluminum demand was dropped, but with the caveat that it would be reconsidered in 10 years.

— Reporting for Reuters by Andrea Shalal and Sharay Angulo; additional reporting by David Lawder in Washington and Abraham Gonzalez and Daina Beth Solomon in Mexico City; writing by Dan Burns.

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U.S. Trade Representative Robert Lighthizer and White House senior adviser Jared Kushner are due to fly to Mexico City on Tuesday to try to pin down final details of the agreement, an administration official told Reuters late Monday afternoon.

Congressional aides and industry sources said that a proposed deal has been sent to U.S. House of Representatives Speaker Nancy Pelosi, who will make the final decision on whether and when to bring the U.S.-Mexico-Canada Agreement (CUSMA) to a vote.

“We’re studying the proposal,” a senior Democratic aide told Reuters, adding that there was not yet an agreement to announce.

The Mexican government has also invited Canada’s deputy prime minister, Chrystia Freeland, to Mexico City, a Mexican official said.

Canadian Prime Minister Justin Trudeau’s office on Monday said Freeland would also be in Mexico City on Tuesday to “participate in meetings with the United States and Mexico on NAFTA.”

CUSMA, which would replace the 26-year-old North American Free Trade Agreement (NAFTA), encompasses US$1.2 trillion in annual trade across the continent. Its backers say it is responsible for 12 million U.S. jobs and a third of all U.S. agricultural exports.

It needs to be approved by lawmakers in all three countries. In the United States, Democrats have so far been reluctant to stage a vote that would give a political victory to Republican President Donald Trump.

And time is running out for a vote before year end. Lawmakers from both parties said that waiting until next year could make it more difficult to ratify, because the presidential election campaign — and perhaps impeachment proceedings against Trump — will be in full swing.

Many on Capitol Hill were reluctant to declare that a deal had been struck. Since negotiations to replace NAFTA first started in August 2017, deals have been imminent numerous times, only to be delayed by last-minute hitches.

Leaders of the U.S., Canada, and Mexico signed the initial CUSMA agreement more than a year ago, but since then, Democrats controlling the House have pressed for changes to strengthen the enforcement of new labour standards and relax data protections for biologic drugs that they fear will mean higher drug prices.

Pelosi is scheduled to meet on Monday evening with senior House Democrats who have been working on changes to the pact, a Democratic House aide said.

Lighthizer last week also added a new demand — that the trade deal strengthen the automotive rules origin to include steel and aluminum that is “melted and poured” in North America.

The prior requirement that 70 per cent of the steel and aluminum in North American cars come from the region did not specify a production method, opening the door to the used of semi-finished metals from China and elsewhere.

Trump, who blamed NAFTA for the loss of millions of U.S. factory jobs during his 2016 re-election campaign and vowed to quit or renegotiate it, said Monday that “a lot of strides have been made over the last 24 hours” on CUSMA.

“I’m hearing very good things. I’m hearing from unions and others that it’s looking good,” Trump told reporters at the White House.

Trump spoke earlier with AFL-CIO president Richard Trumka about the CUSMA negotiations, a person familiar with the call said.

Trumka, one of the most powerful U.S. labour leaders, has been a major party to the negotiations, pushing for stronger labour enforcement provisions that ensure Mexican workers are allowed to unionize.

Trumka earlier told the Washington Post that there was a deal on CUSMA that he was reviewing with his executive committee.

“We have pushed them hard and have done quite well,” Trumka was cited as saying by the Post.

Neither Trumka nor an AFL-CIO spokeswoman responded to queries about the pact or the phone call with Trump.

Mexican senators endorse changes

Details of the proposed changes have not been disclosed. Mexican officials rejected U.S. demands to allow U.S. factory inspectors to supervise labour enforcement, but have said that Mexico would allow panels of experts and a third party to review labour standards.

Mexican President Andres Manuel Lopez Obrador on Monday said that Mexican senators had endorsed changes to CUSMA that had been accepted by Mexico. He urged Pelosi to move forward with a vote on the trade deal.

U.S. Senate finance committee chairman Charles Grassley spoke with USTR’s Lighthizer about the pact on Monday and is hoping for a deal announcement soon, said Grassley’s spokesman, Michael Zona.

Congress had been scheduled to leave Washington by the end of this week, but consideration of spending and defense bills is likely to keep lawmakers working for a few more days beyond that.

“We have to bring this to an end,” Johns Hopkins University professor Jonathan Sands, who directs the university’s Center for Canadian Studies, said of CUSMA approval. “Every part of the trade debate is up in the air right now, with the trade war on China and trade tensions with Europe ramping up.”

U.S.-China trade talks are set to come to a head this week. New U.S. tariffs on some US$156 billion worth of Chinese consumer goods are due to take effect on Sunday unless an interim deal is reached before then.

— Reporting for Reuters by David Lawder and Sharay Angulo; additional reporting by Richard Cowan, David Shepardson, Steve Holland, Jeff Mason and Andrea Shalal; writing by David Lawder. Includes files from Glacier FarmMedia Network staff.

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Bosco de la Vega, head of Mexico’s national farm council CNA, told Reuters that such retaliatory measures should only be applied as a last resort and that he supports the Mexican government’s efforts to first seek a negotiated settlement to the dispute.

De la Vega criticized what he described as Trump’s unjustified “mistreatment” of Mexico by threatening the across-the-board tariffs on the country’s exports and emphasized that any potential retaliation should seek to cause the U.S. leader maximum political pain.

“In the unlikely event that (the U.S. tariffs are enacted), we will be supporting the government in surgically implementing tariffs aimed at farm products in Republican states,” he said.

Mexico has employed the strategy before as a means of pressuring Trump’s base of supporters in rural America, by seeking to convince them his policies are counterproductive.

Noting that Mexican officials are “drawing up a new map” of potential U.S. targets, de la Vega emphasized that such measures should only be taken as a last result after negotiations between both sides run their full course.

Nevertheless, the president of Mexico’s national farm council, which represents the country’s largest private sector agriculture and livestock companies, ticked off potential targets for the Mexican government’s possible retaliation, including U.S. grains like yellow corn, pork legs, apples, potatoes and whiskey.

“This would be a last resort and we have to wait to see if by June 10 they’ve solved it,” he said, referring to the date Trump said an initial five per cent tariff on all Mexican exports would take effect if Mexico fails to stop the flow of migrants into the United States.

“I’m betting that they’re going to solve it,” he added.

For decades, Mexico and the United States have engaged in complementary agricultural trade in which U.S. farmers sell large volumes of yellow corn and select meat cuts, for example, to buyers south of the border, while Mexican producers send products such as avocados and berries, among many others, north.

Last year, Mexico exported some US$26 billion in agricultural products to the United States, according to CNA data.

— Reporting for Reuters by David Alire Garcia and Sharay Angulo.

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The three-month-old government of President Andres Manuel Lopez Obrador is currently working on an updated list of products imported from its northern neighbour on which to possibly apply a second round of tariffs in response to U.S. measures imposed on Mexican steel and aluminum by the Trump administration last year.

Last June, Mexico imposed tariffs of between 15 and 25 per cent on steel products and other U.S. goods, in retaliation for the tariffs applied on the Mexican metals imports that Trump imposed citing national security concerns.

Mexico’s Deputy Minister for Foreign Trade Luz Maria de la Mora told Reuters last week that Mexico is reviewing the list of U.S. products to which former President Enrique Pena Nieto applied reprisals. She said a new list would be set by the end of April if the United States has not withdrawn tariffs on Mexican steel and aluminum before then.

“Yes, there is the lobby, and yes we agree that a mirror policy applies,” Bosco de la Vega, head of Mexico’s National Farm Council, told reporters on Tuesday when asked if Mexican farmers are pushing to include specific U.S. grains, chicken and beef products in the new list.

“The Mexican government knows that the U.S. agricultural sector is what hurts the United States’ government the most,” said de la Vega, pointedly noting that U.S. farmers constitute “President Donald’s hard-core base.”

He said Mexican grains farmers have been “the big losers” during decades of liberalized agricultural trade with the United States.

Lopez Obrador, who took office in December, has pledged to make Mexico self-sufficient in key farm products in which U.S. imports have grown dramatically over the past couple decades, including yellow corn, used mostly by Mexico’s livestock sector.

De la Vega comments largely echo those of senior Lopez Obrador agricultural officials.

“Over the past 25 years, the government allowed corn, wheat, sorghum, soy, milk and other products to be imported below production costs,” said Victor Suarez, a deputy agricultural minister.

Suarez added the long-standing policy of previous Mexican governments to allow heavily subsidized U.S. farm products has not yielded lower prices for consumers and should be replaced by a more protectionist policy.

–– Reporting for Reuters by Sharay Angulo; writing by Frank Jack Daniel.

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U.S. and Canadian trade officials set plans to resume their talks on Wednesday with the aim of getting a deal all three nations could sign.

After four intensive days of talks in Washington between Canada and the U.S., the biggest sticking points were familiar ones: U.S. demands for more access to Canada’s closed dairy market and Canadian insistence that a trade dispute settlement system be maintained, not scrapped as Washington wants.

“For Canada, the focus is on getting a good deal, and once we have a good deal for Canada, we’ll be done,” the country’s foreign minister, Chrystia Freeland, told a news conference.

All three countries have stressed the importance of NAFTA, which underpins US$1.2 trillion in regional trade. A bilateral deal announced by the U.S. and Mexico on Monday had paved the way for Canada to rejoin the talks this week.

But by Friday the sentiment turned, partly on Trump’s explosive off-the-record remarks made to Bloomberg News that any trade deal with Canada would be “totally on our terms.” He later confirmed the comments, which the Toronto Star first reported.

“At least Canada knows where I stand,” Trump later said on Twitter.

Trump notified Congress that he intends to sign the trade pact by the end of November. Text of the deal will be published by around Oct. 1.

Ottawa has stood firm against signing “just any deal.”

Some U.S. lawmakers and business groups expressed concern about Canada’s not yet being not yet part of the agreement.

“Anything other than a trilateral agreement won’t win Congressional approval and would lose business support,” the chief executive of the U.S. Chamber of Commerce, Thomas Donohue, said in a statement.

The Canadian dollar weakened to C$1.3081 to the U.S. dollar after news of the talks’ lack of a result first broke. Canadian stocks remained 0.5 per cent lower. Global equities were also down following the hawkish turn in Trump’s comments on trade.

Following a meeting with Freeland, Mexican Economy Minister Ildefonso Guajardo said he was confident the U.S. and Canada would reach an agreement.

U.S. Trade Representative Robert Lighthizer has refused to budge despite repeated efforts by Freeland to offer some concessions on dairy to maintain the independent trade dispute resolution mechanism under Chapter 19 of NAFTA, The Globe and Mail reported on Friday.

However, a USTR spokeswoman said Canada had made no concessions on agriculture, which includes dairy, but said that negotiations continued.

Trump argues that Canada’s hefty dairy tariffs are hurting U.S. farmers, an important political base for his Republican party. But dairy farmers have great political clout in Canada, too, and concessions could hurt the ruling Liberals ahead of a 2019 federal election.

At a speech in North Carolina on Friday Trump took another swipe at Canada. “I love Canada, but they’ve taken advantage of our country for many years,” he said.

–– Reporting for Reuters by Julie Gordon and Sharay Angulo in Washington and Allison Martell in Toronto; additional reporting by David Lawder in Washington, Veronica Gomez in Mexico City and Allison Lampert in Montreal; writing by Denny Thomas.

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Despite some contentious issues still on the table, the increasingly positive tone contrasted with U.S. President Donald Trump’s harsh criticism of Canada in recent weeks, raising hopes that the year-long talks on the North American Free Trade Agreement will conclude soon with a trilateral deal.

“Canada’s going to make a deal at some point. It may be by Friday or it may be within a period of time,” U.S. President Donald Trump told Bloomberg Television. “I think we’re close to a deal.”

Trilateral talks were already underway at the technical level and Mexican Economy Minister Ildefonso Guajardo was expected to soon rejoin talks with U.S. Trade Representative Robert Lighthizer and Canadian Foreign Minister Chrystia Freeland, possibly later on Thursday, people familiar with the process said.

Negotiations entered a crucial phase this week after the U.S. and Mexico announced a bilateral deal on Monday, paving the way for Canada to rejoin talks to modernize the 24-year-old accord that underpins over US$1 trillion in annual trade.

The NAFTA deal that is taking shape would likely strengthen North America as a manufacturing base by making it more costly for automakers to import a large share of vehicle parts from outside the region. The automotive content provisions, the most contentious topic, could accelerate a shift of parts-making away from China.

A new chapter governing the digital economy, along with stronger intellectual property, labor and environmental standards could also work to the benefit of U.S. companies, helping Trump to fulfill his campaign promise of creating more American jobs.

Trump has set a Friday deadline for the three countries to reach an agreement, which would allow Mexican President Enrique Pena Nieto to sign it before he leaves office at the end of November. Under U.S. law, Trump must wait 90 days before signing the pact.

The U.S. president has warned he could try to proceed with a deal with Mexico alone and levy tariffs on Canadian-made cars if Ottawa does not come on board, although U.S. lawmakers have said ratifying a bilateral deal would not be easy.

Dairy, dispute settlement

One sticking point for Canada is the U.S. effort to dump the Chapter 19 dispute-resolution mechanism that hinders the United States from pursuing anti-dumping and anti-subsidy cases. Lighthizer said on Monday that Mexico had agreed to eliminate the mechanism.

Trump also wants a NAFTA deal that eliminates dairy tariffs of up to 300 per cent that he argues are hurting U.S. farmers, an important political base for Republicans.

But any concessions to Washington by Ottawa is likely to upset Canadian dairy farmers, who have an outsized influence in Canadian politics, with their concentration in the provinces of Ontario and Quebec.

“Ultimately, we’ve got huge issues that are still to be resolved,” said Jerry Dias, head of Canada’s influential Unifor labour union. “Either we’re going to be trading partners or we’re going to fight.”

— Reporting for Reuters by Julie Gordon and Sharay Angulo; additional reporting by David Lawder; writing by Denny Thomas and David Lawder.

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Under pressure, Canada rejoined the talks to modernize the 24-year-old North American Free Trade Agreement after Mexico and the United States announced a bilateral deal on Monday.

Canadian Foreign Minister Chrystia Freeland said late on Wednesday that talks were at “a very intense moment” but said there was “a lot of good will” between Canadian and U.S. negotiators.

“Our officials are meeting now and will be meeting until very late tonight. Possibly they’ll be meeting all night long,” Freeland said. She and U.S. Trade Representative Robert Lighthizer had agreed to review progress early on Thursday.

U.S. President Donald Trump has set a Friday deadline for the three countries to reach an in-principle agreement, which would allow Mexican President Enrique Pena Nieto to sign it before he leaves office at the end of November. Under U.S. law, Trump must wait 90 days before signing the pact.

Trump has warned he could try to proceed with a deal with Mexico alone and levy tariffs on Canadian-made cars if Ottawa does not come on board, although U.S. lawmakers have said ratifying a bilateral deal would not be easy.

“They (Canada) want to be part of the deal, and we gave until Friday and I think we’re probably on track. We’ll see what happens, but in any event, things are working out very well.” Trump told reporters at the White House.

The upbeat tone contrasted with Trump’s harsh criticism of Canada in recent weeks, railing on Twitter against Canada’s high dairy tariffs that he said were “killing our Agriculture!”

Canadian Prime Minister Justin Trudeau said he thought the Friday deadline could be met.

“We recognize that there is a possibility of getting there by Friday, but it is only a possibility, because it will hinge on whether or not there is ultimately a good deal for Canada,” he said at a news conference in northern Ontario on Wednesday. “No NAFTA deal is better than a bad NAFTA deal.”

Freeland, who is Canada’s lead negotiator, was sidelined from the talks for more than two months, and will be under pressure to accept the terms the U.S. and Mexico worked out.

She declined comment on the issues still in play, but said on Tuesday that Mexico’s concessions on auto rules of origin and labour rights had been a breakthrough.

Ottawa is also ready to make concessions on Canada’s protected dairy market in a bid to save a dispute-settlement system, The Globe and Mail reported late on Tuesday.

Sticking points

One of the issues for Canada in the revised deal is the U.S. effort to dump the Chapter 19 dispute resolution mechanism that hinders the U.S. from pursuing anti-dumping and anti-subsidy cases. U.S. Trade Representative Robert Lighthizer said on Monday that Mexico had agreed to eliminate the mechanism.

To save that mechanism, Ottawa plans to change one rule that effectively blocked U.S. farmers from exporting ultrafiltered milk, an ingredient in cheesemaking, to Canada, the Globe and Mail reported, citing sources.

Trudeau repeated on Wednesday that he will defend Canada’s dairy industry.

Earlier on Wednesday, the Trump administration’s own anti-dumping duties on Canadian paper, used in books and newsprint, were thrown out by the U.S. International Trade Commission.

The independent panel ruled that about US$1.21 billion in such paper imports from Canada were not harming U.S. producers.

Other hurdles to a NAFTA deal include intellectual property rights and extensions of copyright protections to 75 years from 50, a higher threshold than Canada has previously supported.

Some see the tight time-frame as a challenge.

“There’s nothing here that is not doable for Canada,” said Brian Kingston, vice-president for international affairs at the Business Council of Canada.

“We’ve got the best negotiators in the world, but they can only stay awake so many hours of every day.”

— Reporting for Reuters by Julie Gordon and Sharay Angulo; additional reporting by Mohammad Zargham, David Alexander, Susan Harvey, Donia Chiacu, David Lawder, Makini Brice and Jeff Mason, and Allison Martell and Anna Mehler Paperny in Toronto; writing by Roberta Rampton, Denny Thomas and David Lawder.

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But Ottawa will be under pressure to accept new terms on autos trade, dispute settlement and intellectual property rules after the U.S. and Mexico agreed on Monday to overhaul the North American Free Trade Agreement (NAFTA).

U.S. President Donald Trump warned he could proceed with a deal with Mexico alone and levy tariffs on Canada if it does not come on board with the revised trade terms.

A spokesman for Canadian Foreign Minister Chrystia Freeland, who arrived in Washington on Tuesday for the talks, said Canada would only sign a new agreement that is good for the country.

Freeland rejoins the year-long talks following a hiatus of several weeks as the U.S. and Mexico ironed out bilateral differences in the renegotiation of the 24-year-old accord.

They have agreed on several provisions that Canada opposes, making it harder for Freeland to win concessions from U.S. Trade Representative Robert Lighthizer.

“I think he’s going to sit there with his arms folded a lot,” said Dan Ujczo, a Columbus, Ohio-based trade lawyer who focuses on U.S.-Canada issues. “It’s not going to be a positive discussion this week.”

U.S. Treasury Secretary Steven Mnuchin told CNBC on Tuesday that he believed the U.S. could also reach a trade deal with Canada this week.

“The U.S. market and the Canadian markets are very intertwined,” Mnuchin said. “It’s important for them to get this deal and it’s important for us to get this deal.”

Mexican Foreign Minister Luis Videgaray told Mexican television on Tuesday the three sides would work for a three-way deal. “We are now going to devote long hours to the negotiation with Canada,” he said.

Negotiations among the three partners, whose mutual trade totals more than US$1.2 trillion annually, have dragged on for more than a year, putting pressure on the Mexican peso and the Canadian dollar. Both currencies gained against the U.S. dollar on Monday, but the peso weakened Tuesday.

Canada’s main stock index opened higher on Tuesday on hopes for a NAFTA trade deal, before dipping. U.S. stocks edged to record highs for a third consecutive session.

A sticking point for Canada is the U.S. effort to dump the Chapter 19 dispute resolution mechanism that hinders the U.S. from pursuing anti-dumping and anti-subsidy cases. Lighthizer said on Monday that Mexico had agreed to eliminate the mechanism.

Other hurdles include intellectual property rights, such as the U.S.-Mexico 10-year data exclusivity for biologic drug makers and extensions of copyright protections to 75 years from 50, all higher thresholds than Canada has previously supported.

Trump says he still could put tariffs on Canadian-made cars if Canada did not join its neighbors and warned he expected concessions on Canada’s dairy protections.

Canada’s dairy farmers operate under a protectionist system that manages supplies and prices, and imposes high tariffs to limit imports. U.S. demands have ranged from ending those tariffs to scrapping a pricing system for milk ingredients that hurt U.S. exports of milk proteins.

“It seems like a pretty steep challenge to now resolve these issues in three days,” said David Wiens, a Manitoba dairy farmer and vice-president of industry group Dairy Farmers of Canada.

Canadian Prime Minister Justin Trudeau, speaking to reporters Tuesday in Quebec, said good progress had been made on auto terms in the talks between Mexico and the U.S. and that Canada looked forward to signing a deal as long as it was good for Canadians.

“My position on defending supply management has not changed,” Trudeau said.

Bilateral legal concerns

If a deal is not reached with Canada, Mnuchin said, the U.S. would proceed with a separate trade agreement with Mexico.

The Mexican government has also taken that position, even as it says it wants a trilateral deal. Mexican President Enrique Pena Nieto is keen to sign the agreement before leaving office at the end of November.

But U.S. Senate Democratic leader Chuck Schumer said a bilateral U.S.-Mexico raises “serious legal concerns” because the “fast track” negotiating authority used for NAFTA requires a trilateral deal. This may require a far more difficult 60-vote threshold in the Senate for ratification of a U.S.-Mexico bilateral trade deal.

If talks with Canada are not wrapped up by Friday, Trump plans to notify Congress that he intends to sign a deal with Mexico, but would be open to Canada joining, Lighthizer told reporters on Monday.

The White House has said Trump will sign the deal 90 days after notification. Congress needs to approve it in a process that will take several months, extending well into 2019.

— Reporting for Reuters by Julie Gordon and Sharay Angulo; additional reporting by Rod Nickel in Winnipeg, Miguel Angel Gutierrez in Mexico City and Andrea Hopkins in Ottawa; writing by Anthony Esposito and David Lawder.

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Talks to rework the 24-year-old pact are entering a crucial phase and Mexican Economy Minister Ildefonso Guajardo said outstanding bilateral issues between Mexico and the U.S. could be resolved by the middle of this week.

Much of the renegotiation, which has gone on for more than a year, has focused on revamping rules for the automotive industry. The U.S. government wants the rules changed to try to secure more business for American manufacturing workers.

Another divisive issue has been a proposal by the Trump administration to put seasonal curbs on some agricultural exports to the United States. But a senior executive at Mexico’s National Agricultural Council (CNA) said that had been dropped.

“Our U.S. counterparts tell us that… the United States has decided to withdraw (the proposal) from the table,” Mario Andrade, CNA vice-president for foreign trade, told Reuters.

Mexico’s Economy Ministry did not immediately reply to a request for comment on Andrade’s remarks. A spokeswoman for the office of U.S. Trade Representative Robert Lighthizer could not immediately be reached for comment.

Andrade said the move followed a lobbying effort that sought to show that the “seasonality” demand stood to benefit a small fraction of U.S. agricultural producers while putting many other U.S. farmers at risk from Mexican retaliation.

The withdrawal of the seasonality measure would allow U.S. and Mexican negotiators to focus on the remaining outstanding issues when they reconvene for talks this week.

Officials say that Canada, which has not taken part in the latest talks while the U.S. and Mexico resolve their differences, could soon be asked back to the negotiating table.

— Reporting for Reuters by Sharay Angulo; additional reporting by David Lawder in Washington.

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U.S. Trade Representative Robert Lighthizer, showing impatience at the slow pace of the talks, said Mexico’s presidential election and the looming expiry of a congressional negotiating authorization in July put the onus on the U.S., Mexico and Canada to come up with a plan soon.

“We probably have a month, or a month and a half, or something to get an agreement in principle,” Lighthizer told reporters at the conclusion of a seventh round of talks to overhaul the North American Free Trade Agreement in Mexico City.

He was speaking after meeting Mexican Economy Minister Ildefonso Guajardo and Canadian Foreign Minister Chrystia Freeland for a joint event marked by a more cordial mood than in previous rounds, despite major disagreements over U.S. President Donald Trump’s plan to impose steel tariffs.

Trump has threatened to dump NAFTA unless it boosts U.S. manufacturing and employment, arguing the 1994 accord has caused the migration of jobs and factories southward to lower-cost Mexico.

Guajardo told reporters the three countries aimed to hold lower-level discussions on NAFTA over the next five weeks before an eighth round, probably in early April.

During that period, he and his two counterparts also aimed to meet to narrow differences on the most complex issues in the talks, which include agreeing on new auto content rules, a dispute-resolution mechanism and agricultural market access.

Lighthizer said time to rework the deal was running “very short” and again raised the possibility of the U.S. pursuing bilateral deals with its partners — albeit stressing that his government would prefer a three-way agreement.

He said the U.S. was making more headway with its southern neighbour than with Canada.

Freeland declined to give details on a prospective timeline for the next round and said alongside Lighthizer that Trump’s plan to impose a 25 per cent tariff on steel imports and a 10 percent tariff on aluminum imports was “unacceptable.”

U.S. trade promotion authority (TPA) is authorized by Congress and is needed to implement legislation for new trade agreements such as the renegotiation of NAFTA. The TPA expires on July 1 and analysts expect it to be extended.

The U.S. also holds congressional elections in November.

Tariff exemption lure

Early on Monday, the U.S. president ratcheted up tension before the ministerial meetings in Mexico by tweeting that “Tariffs on Steel and Aluminum will only come off if new + fair NAFTA agreement is signed.”

Lighthizer said that meant Canada and Mexico would enjoy tariff exemptions once a NAFTA deal was reached, calling the tariffs an “incentive” to conclude the talks.

Canada and Mexico say they should be exempted from such moves, and have warned they could retaliate.

Guajardo said there would be no concessions made in the NAFTA negotiations to placate Trump on steel and aluminum, while Freeland said the two issues were separate.

Guajardo urged all sides, however, to avoid a trade war and said Mexico would wait for a U.S. decision. If the U.S. did impose tariffs, a response should be tailored to the sector in question to avoid complicating other issues, he added.

“Contaminating strategies just ends up making you escalate the nature of the conflicts,” Guajardo said.

Trump early Monday also tweeted that Canada “must treat our farmers much better. Highly restrictive,” and Mexico “must do much more on stopping drugs from pouring into the U.S.”

Talks to overhaul the 24-year-old pact are moving slowly, in part because Canada and Mexico have resisted U.S. demands to boost the North American content of autos produced inside NAFTA.

When asked about the discussions on the rules of origin for autos, Guajardo noted that no trade deal could depend only on the interests of one particular sector.

Although Mexico holds its election in July, it will not change governments until December, and Guajardo pledged to keep negotiating for as “as long as necessary” while President Enrique Pena Nieto’s administration is in office.

Lighthizer said only six chapters had been concluded since talks began in August. Negotiators are working on 30 chapters overall, he said, including a new one on energy.

Uncertainty over the talks, and the potential for a wider global trade war, are making investors nervous.

During the latest round, negotiators concluded talks on rules governing food safety and animal health, good regulatory practices, plus administration and publication, officials said.

— Reporting for Reuters by Lesley Wroughton and Sharay Angulo; additional reporting by David Ljunggren, Dave Graham, Adriana Barrera and Anthony Esposito in Mexico City and Fergal Smith in Toronto; writing by Lesley Wroughton and David Ljunggren. Includes files from AGCanada.com Network staff.

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