NAFTA: Is Canada stalled, or stalling?

WASHINGTON Chrystia Freeland was not happy.

With trilateral NAFTA talks having been on hiatus for most of the summer, the foreign affairs minister was in Berlin, barely one full day into a week-long diplomatic mission to Europe, when news emerged that the United States and Mexico had forged their own trade alliance in Canada’s absence.

By Aug. 28, Freeland was back in Washington, hosting a meeting at the Canadian embassy, where sources say she gave members of the Mexican negotiating team a piece of her mind.

“She brought them in for that purpose,” said one source familiar with the encounter.

By all indications, things haven’t improved much.

Three-way talks with U.S. Trade Representative Robert Lighthizer and Mexican Economy Secretary Ildefonso Guajardo have not taken place since, and none are imminent. Freeland is spending Monday in Ottawa for the return of Parliament.

Last week, in Washington for a full day of meetings with Lighthizer, Freeland insisted the bilateral negotiations have been “constructive,” “productive” and brimming with “goodwill.”

But multiple sources familiar with the tenor of those talks, speaking on condition of anonymity given the sensitivity of the matter, say the mood has been decidedly less cordial than the minister lets on in public.

Kenneth Smith Ramos, Mexico’s chief negotiator, seems to be hedging his bets.

“Mexico stated from the beginning of the negotiation that the ideal scenario is for NAFTA to remain trilateral,” he tweeted Wednesday from Washington, where he was taking part in a legal review of the agreement in principle with the U.S.

“We hope the U.S. and Canada will conclude their bilateral negotiation shortly. If that is not possible we are ready to advance bilaterally with the U.S.”

There’s confidence in Ottawa that Congress won’t approve a deal without Canada. But with a good Mexico-U.S. deal on the table and the clock ticking toward game-changing U.S. midterms in November, that’s not a given, warned Dan Ujczo, an Ohio-based trade lawyer with Dickinson Wright.

“I think while Congress is generally supportive of Canada, given that Canada is playing defence on a lot of these issues, I don’t know how long that will hold,” said Ujczo, who is well-versed in NAFTA’s nuances. “I envision a scenario where Congress will be very noisy about getting Canada in, but at the end of the day they’ll let the U.S.-Mexico deal proceed, so long as the status quo with Canada is maintained while we negotiate.”

The prevailing narrative throughout the 13-month saga has revolved around a number of primary sticking points — maintaining an independent dispute resolution mechanism and the way Canada protects its dairy farmers.

Dairy will be on the lips and minds of many Monday on Parliament Hill, especially given U.S. President Donald Trump’s penchant for railing against Canada’s supply management system for dairy, poultry and eggs, and the pivotal importance of Quebec — home to nearly half the country’s dairy farmers and currently in the throes of a provincial election campaign — to the federal government’s own electoral fortunes.

One place where supply management hasn’t been as hot a topic as advertised? The NAFTA talks themselves, officials suggest.

Canada has already offered to allow limited additional access for American dairy producers, they say, and to drop a new class of milk that effectively shut them out of the Canadian market for milk ingredients like protein concentrates, skim milk and whole milk powder.