US and Mexico have reached common ground on key trade terms

The US and Mexico have reached common ground on key trade terms as pressure mounts to complete renegotiation of the 25-year-old North American Free Trade Agreement.

US President Donald Trump, a frequent critic of the existing deal, announced the apparent breakthrough on Monday. The final outcome remains in doubt with Canada, the third country in the pact, due to rejoin talks on Tuesday. Mr Trump has triggered a year of talks, after threatening to pull out of Nafta.

In a televised appearance at the White House, Mr Trump said the US and Mexico had agreed on terms that would make for an “incredible” deal that was “much more fair”.

Negotiators have been rewriting the Nafta treaty over the past year, but in the last five weeks, Canada has not been part of the discussions. “We will see whether or not we decide to put up Canada or just do a separate deal with Canada,” Mr Trump said.

He also threatened Canada with tariffs on cars and said he wanted to get rid of the name Nafta, which he said has “bad connotations”.

Nafta covers more than $1tr (£780bn) in annual trade.

The update is to include provisions to govern intellectual property, digital trade and investor disputes, among other issues. In the preliminary agreement announced on Monday, the US and Mexico agreed that 75% of a product must be made in the two countries to receive tax-free treatment, which is more than in the existing deal, the US said.

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