Sources tell The Canadian Press an 11th-hour NAFTA deal has been reached that allows Canada to rejoin the trilateral trade pact.
Canada and the USA reached a tentative NAFTA deal Sunday that one source briefed on talks said would give American farmers major new access to the dairy market here, but preserve the dispute-resolution system the United States wanted to scrap.
Under U.S. trade law, an agreement must be published for 60 days before it can be signed by leaders of any of the participant countries, putting negotiators on the clock to reach a deal that can be signed by November 30.
Canada agreed to a cap on auto exports to the US - of about 40 per cent above current production levels - that would be free of any auto tariffs Trump might impose, the source said.
Trump's primary objective in reworking NAFTA was to bring down US trade deficits, a goal he has also pursued with China, by imposing hundreds of billions of dollars in tariffs on imported goods from the Asian giant.
The Trump administration officially notified Congress of the U.S. -Mexico trade agreement on August 31.
A high-ranking team of Canadian officials, including Canadian PM Justin Trudeau, Canada's Ambassador to Washington David MacNaughton, and Foreign Affairs Minister Chrystia Freeland, were thrashing out the details of the deal via video conference with Washington over the weekend.
By early evening it appeared high-level talks would bump right up against, and maybe past, a midnight deadline that the USA insisted needed to be met to deliver a new NAFTA agreement to Congress.
"The middle-ground approach looks like when they announce the deal, that the three parties will be meeting at such-and-such a date in the immediate future to resolve the steel and aluminum tariffs", he said.
Reutersreported Sunday that Lighthizer and White House adviser Jared Kushner planned to brief Trump on Sunday.
Negotiators from both sides spent two days talking by phone as they tried to settle a range of hard issues such as access to Canada's closed dairy market and U.S. tariffs.
Canada and the United Stares are also looking for a compromise on the issue of USA tariffs.
One of the officials said the discussions between Canada and the US were ongoing, but progress was being made. Trudeau said he would have more to say Monday. In August past year, he started a review of the trade pact with Mexico and Canada that opened up negotiations.
The deal will preserve a trade dispute settlement mechanism that Canada fought hard to maintain to protect its lumber industry and other sectors from United States anti-dumping tariffs, Canadian sources said.
Pierre Lampron, president of Dairy Farmers of Canada, said in a statement. And only vehicles that failed to meet the rules of origin for auto parts agreed to by the USA and Mexico would even potentially be subject to the proposed auto tariffs.
Of these imported vehicles, half were made in Canada or Mexico.
The United States and Mexico want to push a deal they separately negotiated through their respective legislatures before Mexican President-elect Andres Manuel Lopez Obrador takes office on December 1.
"The ideal is a trilateral deal, but we're prepared for the possible need of a bilateral", he told Bloomberg News.
Trump has also called NAFTA the "worst trade deal in history".
Discussions between the United States and Canada had stalled amid souring relations between Trudeau and Trump, who lashed out at Canada last week during the United Nations General Assembly meeting for mistreating the United States on trade.
However, Canada has continued to impose high tariffs on dairy products as the country's politically powerful dairy farmers have resisted changes to the high tariffs that protect them from foreign competition.
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