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Report: Trump won’t compromise with Canada on NAFTA

August 31, 2018

The Toronto Star reports that President Donald Trump has said privately that he won’t make compromises with Canada in high-stakes talks to revamp the North American Free Trade Agreement.

The report appeared to raise doubt about whether the two countries can reach a deal soon to keep Canada in the trading bloc.

The Star obtained the comments from a Trump interview with Bloomberg News. Trump wanted the comments to remain private because otherwise “it’s going to be so insulting they’re not going to be able to make a deal.”

Canada said gaps with the U.S. remain on NAFTA as the Trump administration pushes to open the Canadian dairy industry ahead of a U.S.-imposed deadline of Friday for a tentative deal.

Canadian Prime Minister Justin Trudeau said it’s possible to reach a trade deal but that he’ll only sign an agreement that’s right for Canada. Trudeau reiterated his government wouldn’t concede to U.S. demands to dismantle its dairy system, known as supply management. Talks are also hung up on U.S. demand to eliminate dispute-resolution panels that Ottawa considers essential, two Canadian officials said Friday.

Canada has been clear about its “red lines” around NAFTA, Trudeau said at an event in Oshawa, Ontario. “We are looking forward to signing the right deal for Canada. But we have also been very clear, we will only sign a deal if it is a good deal for Canada.”

Earlier Friday, the Trump administration pushed Canada to give ground on its politically sensitive dairy sector, which is protected by a system of quotas given to domestic farmers.

“The negotiations between the United States and Canada are ongoing. There have been no concessions by Canada on agriculture,” a U.S. Trade Representative’s Office spokesperson said Friday in an email.

USTR chief Robert Lighthizer still plans to send a notice to Congress on Friday of President Donald Trump’s intention to sign a deal to replace NAFTA, as the administration has previously indicated, said a person familiar with the matter.

Win-win talks

“Canada is a country that is good at finding win-win compromises. Having said that, we will always stand up for the national interest,” Canadian Foreign Affairs Minister Chrystia Freeland told reporters Friday after meeting with Lighthizer. “We’ll only agree to a deal that’s good for Canada. We’re not there yet.”

Trump is stepping up pressure on the Canadians to join a preliminary deal that he reached with Mexico earlier this week. It’s unclear whether the president’s tactics will be enough to spur concessions that bridge the final divides.

“Canada’s going to make a deal at some point. It may be by Friday or it may be within a period of time, but ultimately they have no choice,” Trump said Thursday in an interview with Bloomberg in Washington as bargainers struggled to resolve critical issues. “I think we’re close to a deal.”

It remains to be seen if the notice Lighthizer sends to Congress only mentions the deal with Mexico, or includes recent progress in talks with Canada. Members of Congress, including many in Trump’s own Republican Party, say a deal must include Canada to be approved under a legislative tool that allows a simple yes-or-no vote in Congress.

“The Canadian and American negotiators continue to work on reaching a win-win deal that benefits both countries,” White House Deputy Press Secretary Lindsay Walters said.

Chapter 19, steel

Meanwhile, an impasse continues on another core issue: Chapter 19 anti-dumping panels. Canada won’t give in to U.S. demands to kill the Chapter 19 panels, a Canadian official familiar with talks said Friday. Another person familiar with talks said preserving Chapter 19 remains very important to Canada.

A breakthrough will likely require a trade-off between the two nations. An agreement where America softens its demands to eliminate a dispute-settlement panel in return for Canadian concessions on dairy may pave the way for a deal.

Another key issue is U.S. tariffs on steel and aluminum imports, though it’s unclear whether relief from those will be included. Mexico didn’t get any reprieve in its own agreement on Monday.

Canada rejoined face-to-face negotiations on Tuesday, a day after the U.S. and Mexico announced a preliminary agreement in principle.

Trump must notify Congress 90 days before signing the pact, which will need the approval of lawmakers. Talks of some kind with Canada are likely to stretch into September even if the preliminary agreement is announced Friday.

Bloomberg News and the Associated Press contributed to this report.

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