Canada Excluded From Deal, But President Says He'll Talk To PM Trudeau, Possibly Put Economic Pressure On Neighbors To The North

WASHINGTON (CBSNewYork/AP) — President Donald Trump announced on Monday morning that the United States and Mexico have reached a trade agreement, and that he will be “terminating” the North American Free Trade Agreement.

It’s a preliminary deal between the two countries. Trump has been very vocal about his frustrations with NAFTA, previously calling it the worst trade deal ever made, CBS2’s Janelle Burrell reported.

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The deal with Mexico centers on rules surrounding the automotive industry.

President Donald Trump

President Donald Trump, right, arrives in the Oval Office for a telephone call with Mexican President Enrique Pena Nieto on Aug. 27, 2018. Trump announced that the United States and Mexico have reached a preliminary agreement on trade. Also pictured is Mexican Foreign Affairs Minister Luis Videgaray Caso, left. (Photo by Win McNamee/Getty Images)

President Trump spoke to reporters from the Oval Office, with the Mexican president on the phone.

“I like to call this deal the United States-Mexico Trade Agreement. I think it’s an elegant name. I think NAFTA has a lot of bad connotations for the United States because it was a ripoff. It was a horrible deal for our country,” Trump said.

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NAFTA was created 24 years ago, making trade easier between the U.S., Canada and Mexico, but President Trump and other critics say that it has encouraged American manufacturers to move to Mexico because of cheaper labor. Revising NAFTA would need congressional approval, Burrell reported.

This preliminary agreement does not include Canada. America’s neighbors to the north were not part of the negotiations. Canada and the U.S. have been at odds over trade in recent months. U.S. and Mexican officials are reportedly hoping that the progress they’ve made will entice Canada, America’s No. 2 trade partner, to rejoin the talks, Burrell reported.

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The president said he is willing to call Canadian Prime Minister Justin Trudeau, adding, “If they’d like to negotiate fairly, we’ll do that.” Trump also threatened to tax Canadian auto imports to increase the pressure on Canada’s government.

“We could have a separate deal (with Canada) or we could put it into this deal,” Trump said.

U.S. and Mexican negotiators worked over the weekend to narrow their differences. The Office of the U.S. Trade Representative said Monday that Mexico had agreed to ensure that 75 percent of automotive content be produced within the trade bloc (up from a current 62.5 percent) to receive duty-free benefits and that 40 percent to 45 percent be made by workers earning at least $16 an hour.

It remains unclear where Monday’s announcement leaves Canada.

Adam Austen, a spokesman for Canadian Foreign Minister Chrystia Freeland, said: “Canada is encouraged by the continued optimism shown by our negotiating partners. Progress between Mexico and the United States is a necessary requirement for any renewed NAFTA agreement.”

Austen said the Canadians had been regular contact with the NAFTA negotiators.

“We will only sign a new NAFTA that is good for Canada and good for the middle class,” he said, adding that “Canada’s signature is required.”

The No. 2 Senate Republican, John Cornyn of Texas, hailed the “positive step” but said Canada needs to be party to a final deal. “A trilateral agreement is the best path forward,” he said, adding that millions of jobs are at stake.

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(© Copyright 2018 CBS Broadcasting Inc. All Rights Reserved. The Associated Press contributed to this report.)