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The trade deal is expected to provide security for USA companies that invest in Mexico's energy sector, which outgoing President Enrique Peña Nieto opened up for foreign investment in 2013, ending 70 years of state monopoly.

Regardless of Trump's claims of reaching an entirely new trade deal, the new agreement does seem to bring the three countries much closer to a potential NAFTA rewrite more than 25 years after it took effect.

But after a year of intense negotiations to salvage NAFTA, US and Mexican negotiators are keen to seal a new deal before Pena Nieto hands power to President-elect Andres Manuel Lopez Obrador on December 1.

"We will only sign a new NAFTA that is good for Canada and good for the middle class", Freeland said.

Peña Nieto greeted Trump and called the deal "something very positive for the United States and Mexico" but stressed that Canada must be part of the agreement.

The preliminary agreement between Mexico and the U.S. includes a provision that 40 to 45 per cent of auto content would be made by workers earning at least US$16 per hour, as well as 75 per cent of auto content be made in the U.S. and Mexico, according to a brief from the U.S. Trade Representative.

Critics quickly denounced the prospect of cutting Canada out the North American trade pact.

"Canada now has to hurriedly work out a deal, hat in hand", Lawler said. Negotiations with Canada were set to commence "immediately", Trump said.

The deal is the result of five weeks of intense one-on-one talks between the Trump administration and Mexican officials. Trump and some of his aides argued that Canada could be excluded from the agreement if they object to its terms. We'll get rid of the name NAFTA.

Wilbur Ross, the U.S. commerce secretary, confirmed on Tuesday that the Trump administration is "fully prepared to go ahead with or without Canada" in ripping up Nafta and warned that Canada's economy "can't survive well" without a USA deal.

The president is critical of Canada's lopsided treatment of the US, especially with the northern nation's tariffs on dairy products that be almost 300 percent.

The sides also agreed that 40-45 percent of cars must be made at "high wage" factories where workers receive $16 an hour in order to receive duty-free treatment, something that could deter off-shoring United States auto manufacturing to Mexico.

Canadian Foreign Affairs Minister Chrystia Freeland, for her part, is headed to Washington to join the talks.

Some experts interpreted the administration's signaling about a possible bilateral deal as an attempt to pressure Canada into a swift agreement on revising NAFTA, which the United States administration denied.

"If they'd like to negotiate fairly, we'll do that", he told reporters at an Oval Office press conference on Monday. It has a bad connotation because the United States was hurt very badly by NAFTA for many years.

In a statement, Trump said "America has ... finally turned the page on decades of unfair trade deals that sacrificed our prosperity and shipped away our companies, our jobs and our Nation's wealth".

But experts remain skeptical, especially given Canada's absence in the latest round of negotiations, and some are questioning the legality of the bilateral deal. That deadline targets a final sign-off by Mexico's current President Enrique Peña Nieto before his administration leaves in November. It also requires that 75 percent of the parts of cars sold in North America be produced in the United States or Mexico.


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