BERLIN (AP) — Mexico's president has said at a trade fair in Germany that he's optimistic about reaching a deal to overhaul the North American Free Trade Agreement.

President Enrique Pena Nieto and German Chancellor Angela Merkel on Sunday opened the annual Hannover Messe fair, where Mexico is this year's guest country.

Both welcomed a preliminary agreement reached Saturday between the European Union and Mexico to update their nearly 20-year-old trade deal.

Mexico faces a challenge with the United States and Canada in overhauling NAFTA. About three-quarters of Mexico's exports go to the U.S.; roughly half its imports come from there.

Pena Nieto said: "We have optimism, as well, that we're going to be concluding the renegotiation (and) modernization of the North American Free Trade Agreement ... ensuring benefits for all its partners."