US, Mexico trade pact will occur with or without Canada

The latest trade pact between the U.S. and Mexico will stand whether or not Canada can agree to a new deal, according to Mexico’s lead negotiator in the talks to revamp the North American Free Trade Agreement.

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“Obviously if the agreement is Mexico and U.S. that is a good thing,” Mexican Economy Minister Ildefonso Guajardo told FOX Business’ Edward Lawrence on Tuesday. “But the agreement we want, we want to make an attempt to make it inclusive in the original way.”

After a year-long negotiation process, the U.S. and Mexico on Monday agreed to a deal to replace NAFTA.

President Trump also suggested he might leave Canada out of the new agreement -- which would be called the “United States-Mexico Trade Agreement.” Canada is the second-biggest trading partner of the U.S., and Mexico is the third.

But according to Guajardo, this is just the first stage in the negotiating process. Canadian Foreign Minister Chrystia Freeland will arrive in Washington, D.C., on Tuesday to meet with U.S. Trade Representative Robert Lighthizer.

Friday is when Lighthizer will send a letter to Congress, which starts a 90-day clock for lawmakers to look over the agreement for ratification. Canada can sign on up until that ratification, which could be at the end of November.

“Remember the visit from Prime Minister Trudeau to Washington, the message was, ‘It’s going to be very easy to solve the relationship with Canada.’ The one that is complex and very difficult is the relationship with Mexico,” Guajardo said. “Well guess what? Good news for Canada. We solved the first part of this equation. We have to solve the second part."

On Tuesday, Trump’s chief economic adviser, Larry Kudlow, warned that if the U.S. is unable to strike a trade deal with Canada to include it in the NAFTA replacement, the president may consider imposing another round of tariffs on automobile imports.

Prime Minister Justin Trudeau previously has said one of the sticking points is the inclusion of a 5-year sunset clause, which would limit the lifespan of the agreement. Trump’s insistence on including that in the trade pact drew swift rebukes from Canada and Mexico.

According to Reuters, Mexico’s incoming trade negotiator told reporters in Washington that the U.S. had softened its stance on the so-called sunset clause.

“It's going to come out,” Jesus Seade, designated chief negotiator of Mexico's next government, told reporters outside the U.S. Trade Representative's office. “It's no longer what the United States was putting first in anyway.”