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Canada, U.S. in final stretch for NAFTA deal, Friday deadline approaching fast

August 30, 2018

U.S. and Canadian officials on Thursday were frantically hammering out the sticking points for a deal to replace NAFTA, with one day left before President Trump’s deadline for an agreement.

Canadian Foreign Affairs Minister Chrystia Freeland huddled with U.S. Trade Representative Robert Lighthizer to decide key issues for Ottawa to join the U.S.-Mexico deal.

“We have had very intensive work being done by officials who were meeting late into the night last night on a number of different issues,” Ms. Freeland told reporters as she arrived for the third day of trade talks in Washington.

Both sides have expressed options that a deal is in reach before the fast-approaching deadline.

Ms. Freeland said there was “a lot of goodwill.”

“It’s a lot that we’re trying to do in a short period of time, we’re working very, very intensely,” she said. “We continue to be encouraged by the constructive atmosphere that I think both countries are bringing to the table.”

Canada is under intense pressure to join the U.S.-Mexico deal that was announced Monday to replace the three-way North American Free Trade Agreement.

Mr. Trump set a Friday deadline for Canada to sign on or else the U.S.-Mexico deal would be submitted to Congress as is.

If Canada is out, Mr. Trump threatened to hit Canada with a 25 percent tariff on cars.

Replacing the 24-year-old NAFTA is a top priority of Mr. Trump, who calls landmark trade agreement “the worst deal ever made.” The negotiations to rewrite NAFTA have dragged on for a year.

Canada stayed on the sidelines this summer while the U.S. and Mexico executed the hard bargaining.

The U.S.-Mexico deal sought to end the mass exodus of manufacturing from the U.S., especially with automakers.

It would raise the minimum level of North American components in an automobile to qualify for tariff-free treatment under NAFTA from 62.5 percent to 75 percent.

The agreement also would boost wages for Mexican workers, keep agricultural products tariff-free, increased environmental standards in Mexico and overhauled rules for copywriters and trade dispute resolutions.

The agreement would last 16 years, with an opportunity to review it and adjust the terms after six years.

A major sticking point for Canada is that the deal eliminated the settlement system for anti-dumping disputes, NAFTA’s Chapter 19.

The U.S. wanted to nix the system and Mexico agreed, but Canada wants the mechanism to fight the Trump administration’s tariffs on softwood lumber, paper and other products.

Meanwhile, Mr. Trump wants Canada to end its tariffs on dairy products, which can run nearly 300 percent.

Ottawa signaled that it is ready to sacrifice it’s dairy tariffs in exchange for a dispute-settlement system, The Globe and Mail reported, but it was unclear if that was acceptable to the U.S.

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