Mon. 11:50 a.m.: US-Mexico agreement could overhaul NAFTA

United States Trade Representative Robert Lighthizer, left, and Mexican Secretary of Economy Idelfonso Guajardo, right, walk into the White House on Monday August 27, 2018. President Donald Trump says the prospects are "looking good" for an agreement with Mexico that could set the stage for an overhaul of the North American Free Trade Agreement. (AP Photo/Luis Alonso Lugo)

WASHINGTON (AP) — President Donald Trump announced this morning a trade “understanding” with Mexico that could lead to an overhaul of the North American Free Trade Agreement.

Trump made the announcement in the Oval Office, with Mexican President Enrique Pena Nieto joining by speakerphone.

Canada, which is part of NAFTA, is not participating in the announcement. Trump says negotiations with Canada have yet to begin and is calling on the country to negotiate fairly. He’s threatening anew to slap tariffs on Canadian cars if they fail to do what he wants.

Trump says the call is being held to “celebrate the understanding” the U.S. and Mexico have reached on trade.

He says, “It’s an incredible deal for both parties.”

U.S. and Mexican negotiators worked over the weekend to narrow their differences. Once they reach an agreement, the third country in NAFTA — Canada — would be brought back in to finalize a revamp of the 24-year-old pact.

NAFTA reduced most trade barriers between the three countries. But Trump and other critics say it encouraged U.S. manufacturers to move south of the border to exploit low-wage Mexican labor.

The Trump administration wants a higher percentage of auto production to come from within the NAFTA bloc before qualifying for duty-free status.

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