WASHINGTON—Canada and the U.S. have agreed on a new North American free trade agreement, concluding an acrimonious 13-month negotiation that had hindered the Canadian economy and damaged relations between the two countries.

They released the full text of the deal after 11 p.m., leaving experts little time on Sunday to pore over the specifics on which the deal will ultimately be judged. The news that they have struck any kind of deal, though, means Prime Minister Justin Trudeau has achieved a long-sought goal: convincing U.S. President Donald Trump to preserve a trade accord Trump has repeatedly threatened to terminate.

“It’s a good day for Canada,” Trudeau said as he left a late-night cabinet meeting in Ottawa, declining to take questions. On Twitter, he said, “A good day for Canada & our closest trading partners. More tomorrow...”

Trump, meanwhile, began touting the deal as a fulfilment of his campaign promise to secure a better arrangement for American workers.

“It’s a great win for the president and a validation of his strategy in the area of international trade,” said a senior Trump administration official, saying it includes a “host of provisions that will rebalance our trade relationship with Mexico and Canada.”

On Twitter on Monday morning, Trump called the deal “wonderful” and a “historic transaction.”

“It is a great deal for all three countries, solves the many deficiencies and mistakes in NAFTA, greatly opens markets to our Farmers and Manufacturers, reduces Trade Barriers to the U.S. and will bring all three Great Nations together in competition with the rest of the world,” he said.

The deal makes substantial changes to the rules governing the North American auto industry. And it will affect dozens of other industries and the consumers who buy their products, from milk to medicine.

Canadian sources said the deal would include significant protection for Canada against the auto tariffs Trump has repeatedly threatened to impose. A Canadian official said the first 2.6 million Canadian car exports to the U.S., significantly higher than the current 1.8 million, would be shielded from tariffs. Trump could hypothetically impose tariffs on cars above that number, but the threshold is so high that the Canadian official said Canada had been effectively exempted.

Both sides said there would be no changes to the “Chapter 19” dispute-resolution system or the cultural exemption Trudeau had made his “red lines” in the last weeks of the negotiations.

Both sides said Trudeau made a concession on dairy, giving U.S. farmers more access to the protected Canadian market than the 3.25 per cent Canada granted its partners in the earlier Trans-Pacific Partnership trade agreement. A Canadian official said the U.S. would be given 3.6 per cent. The Trump official said Canada had also agreed to eliminate its “Class 7” pricing system for certain milk ingredients, an irritant to farmers in Wisconsin and New York.

“We’ve had a great result for our dairy farmers,” the Trump official said.

Both sides said there had not been a resolution on the issue of the steel and aluminum tariffs Trump imposed on Canada or the retaliatory tariffs Trudeau imposed on various U.S. products.

There were no changes related to “TN” visas for professional workers. Canada had wanted the list of eligible occupations expanded, while the U.S. had wanted it reduced; they settled on leaving it the same.

The Trump official said the two sides had agreed to phase out the investor-state dispute settlement system, “Chapter 11,” that allows corporations to sue governments. Both the Trump administration and Trudeau disliked the system, though Trudeau had not said so publicly.

Canada gave ground on intellectual property, agreeing to a U.S. demand to extend copyright terms from the previous standard — the life of the author plus 50 additional years — to the life of the author plus 70 years. Canada also agreed, according to the Canadian official, to extend certain protections for pharmaceutical patent data from eight years to 10 years, a change opposed by generic drug makers.

Canada agreed to raise its low threshold for applying duties on U.S. goods purchased by Canadian online shoppers.

The deal includes a kind of “sunset clause,” which the U.S. had wanted, but far from the five-year termination clause the U.S. had initially proposed, which Trudeau said he could not accept. Instead, the agreement is set to last for at least 16 years. After six years, the three countries would conduct a joint review and then could agree to extend the agreement for an additional 16 year. If they did not agree to a 16-year extension at the six-year mark, they would meet again every year to see if they could hash out their differences and figure out how to agree to the extension.

In a joint statement issued Sunday night, U.S. Trade Representative Robert Lighthizer and Canadian Foreign Affairs Minister Chrystia Freeland said the agreement “will result in freer markets, fairer trade and robust economic growth in our region.”

“It will strengthen the middle class, and create good, well-paying jobs and new opportunities for the nearly half billion people who call North America home,” they said. They said the agreement would be called the United States-Mexico-Canada Agreement, or USMCA.

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Word of the agreement came after 9:30 p.m. Sunday night, just before the deadline the Trump administration had set for publicly publishing the text of its preliminary agreement with Mexico. That would have started a 60-day countdown to the possibility of Trump and Mexican President Enrique Pena Nieto signing a deal that did not include Canada.

The current NAFTA will stay in effect until the end of the process of finalizing the merged three-country agreement, which is still far from over. Most critically, the legislatures of Canada, the U.S. and Mexico, which previously struck its own preliminary agreement with the U.S., must now vote in favour of the final three-country deal.

While that will not be a problem in Canada or Mexico, the U.S. Congress, which has sometimes taken years to approve trade deals struck by presidents, may prove more difficult. If Congress delays, Trump could renew his threats to terminate the current NAFTA to try to pressure Congress into accepting the new one.

Nonetheless, the agreement between Trump and Trudeau appears to put to rest, at least for now, a primary source of bilateral tension. Trump had grown increasingly critical toward Trudeau and Canada as the difficult negotiations dragged on, and he had warned that he could “ruin” the Canadian economy with car tariffs if there was no deal.

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The Trump official said the deal puts “our trade relationships and hopefully our overall relationships on a better and stronger footing.”

The Sunday deal followed a weekend scramble in Ottawa and Washington. Trudeau’s top officials huddled in his office into the night on Saturday and Sunday. Trudeau arrived on Sunday night and later convened a meeting of his cabinet around 10 p.m.

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NAFTA governs more than $1 trillion in annual trade between the three countries. It guarantees tariff-free trade of most products, facilitates the movement of investment capital and professional workers across the two borders, sets rules governing hundreds of kinds of businesses and provides a system for resolving continental trade disputes.

Economists had predicted serious though not catastrophic damage to the Canadian economy if the 24-year-old NAFTA had vanished, with the losses concentrated in Ontario.

The final stage of the negotiations had focused on a small number of issues on which both sides had dug in their heels.

Canada insisted on preserving the “Chapter 19” system that allows Canada to challenge U.S. trade duties at an independent tribunal rather than in U.S. courts. The U.S. had wanted to eliminate it. Trump budged in the end.

The U.S. insisted on substantially more access to Canada’s tightly protected dairy market. Trudeau vowed to preserve the supply management system, which aids domestic farmers, but had signalled for weeks he was open to the incremental concessions opposed by Canada’s dairy lobby. He made those concessions in the end.

Canada had insisted on complete protection from the auto tariffs. Flavio Volpe, president of the Canadian Automotive Parts Manufacturers’ Association, declined to comment on the details of the apparent compromise, but he said Canadian negotiators had to practical when dealing with Trump.

“The principle of agreeing to a cap based on a the threat of illegal tariff is never good, but the reality of negotiating with an administration that has proven that it will harm itself in order to harm its trading partners means that we’ve got to use some realpolitik, to live to fight another day,” Volpe said.

Jerry Dias, president of Unifor, the largest union representing Canadian autoworkers, said late Sunday that he was optimistic about the deal.

“It is incredibly important that we get a deal that stabilizes the auto industry in Canada for the long term and I’m confident that we are heading in that direction,” said Dias.

Rona Ambrose, former interim Conservative leader and a member of Trudeau’s NAFTA advisory council, tweeted her praise. “A NAFTA deal in principle will help ease investor anxiety, stabilize trade exposed sectors and reassure the world that North America remains committed to free trade. Congrats to Team Canada,” she said.

The Canadian Chamber of Commerce said it was “delighted” by word of a deal but that it would be waiting to assess the specific policy changes. And it said Canada should learn a lesson from this “turbulent” period: “We must never again allow ourselves to be overly-dependent upon one trading partner. We must continue to diversify our markets to protect ourselves from capricious and unfair actions in the future.“

Canadians, initially divided on NAFTA, have come to be overwhelmingly supportive. But Trump had called NAFTA the worst trade deal in world history, blaming it for the loss of U.S. manufacturing jobs. He vowed during his 2016 campaign to tear up the accord unless he could secure a better deal for American workers, and he launched renegotiation talks in August 2017.

The new agreement includes substantially altered rules on automotive manufacturing. The U.S. pushed for a series of changes the Trump administration believes will wrest some jobs back to the U.S. from Mexico and overseas.

According to U.S. and Mexican government reports, a car will qualify for tariff-free treatment only if 75 per cent of its contents are made in North America, up from 62.5 per cent in the current NAFTA. And at least 40 per cent of the contents must be produced by workers earning at least $16 (U.S.) per hour, more than three times the wage of the average Mexican autoworker.

The negotiations involved two basic categories: modernization and renegotiation. The modernization track, in which the three countries worked to update an outdated agreement that was finalized before the advent of the internet economy, proceeded smoothly. The renegotiation track was far more difficult. Canada and the U.S. clashed over several U.S. proposals.

Among other things, the Trump administration had initially wanted to eliminate Canada’s supply management system for dairy and poultry, introduce a “sunset” clause that would automatically terminate NAFTA unless all three countries decided again to keep it, sharply reduce Canadian access to U.S. government contracts and eliminate the independent dispute resolution system.

Mexico was Trump’s chief NAFTA target during his election campaign. But it was Canada that drew most of his administration’s public ire in 2017 and 2018.

The Canadian government tried to work around Trump while also seeking to avoid his anger. Trudeau launched an unconventional diplomatic blitz in support of the agreement, dispatching ministers around the U.S. to attempt to build alliances with trade-friendly lawmakers at all levels of government.

Canada was joined in its pro-NAFTA pressure by the main American business lobby groups, such as the U.S. Chamber of Commerce, and by much of the Republican congressional caucus, whose leaders warned Trump that dumping NAFTA would hurt the hot economy. Farm-state legislators told Trump how NAFTA had caused a boom in agricultural exports. Texas legislators told Trump that their state relied on free trade with Mexico.

With files from Bruce Campion-Smith

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