CANADA IN NO RUSH ON NAFTA

Unlike Mexico, Canada resisting ‘artificial deadlines’

In the “psychological warfare” that is trade negotiation, Canada faces another U.S.-imposed deadline this week to conclude high-intensity NAFTA negotiations.

Foreign Affairs Minister Chrystia Freeland said Monday she will rejoin the talks in Washington within days, but Canadian negotiators seem determined to resist the time pressures, setting themselves apart from their Mexican counterparts.

Prime Minister Justin Trudeau has insisted repeatedly that no deal is better than a rushed bad deal, even as American officials push for a resolution as early as Thursday. Meanwhile, sources say U.S. officials have grown frustrated with Canada’s stubborn tactics, led by a taciturn but unflappable career negotiator. The main sticking points include American demands to get more access to the Canadian dairy market, scrap one of NAFTA’s disputeresolution sections and loosen protections for cultural industries here.

By contrast, Mexico has already struck a wide-ranging bilateral deal with the U.S. that one of its top officials admitted recently was less than perfect, and says it’s willing to push ahead without Canada if necessary.

“Unlike Mexico, Canada has been steadfastly focused on the content of the agreement, and trying not to get boxed in by artificial deadlines,” said Eric Miller, a Washington-based consultant and veteran of several major free-trade negotiations. “The deal will take as long as the deal takes, whether it takes till the end of the month or the end of the year.”

Miller believes Canada’s approach makes sense.

Other observers worry that it risks leaving the country under a prolonged cloud of economic uncertainty.

But what seems clear are the divergent negotiating strategies of the United States’ two North American partners, in the face of a White House bent on rewriting the rules of free trade.

Mexico “did what was possible and not what was desirable,” Luz Ma de la Mora, the country’s incoming undersecretary of state for trade, said last week. “Seems to me that it is better to have a NAFTA 0.8 ... than not to have a NAFTA.”

The latest deadline stems from the push to have a revamped North American Free Trade Agreement ready for outgoing Mexican president Enrique Peña Nieto to sign at the end of November, giving him a legacy and allowing his successor to deflect criticism. To meet that goal, U.S. law says a text of any agreement should be released no later than Sept. 30, meaning a handshake deal with Canada would likely be required by the end of this week.

But the list of contentious issues is long, including a U.S. push to extend patent protection for certain drugs and change copyright rules, while Congress has indicated it’s anxious to bring Canada back into the trade fold. With lawmakers setting the rules, they could let talks could grind on to the end of the month, or beyond, experts say.

“Mexico, they can sign whatever they want (on Nov. 30). They can sign a napkin. They don’t need the complete text,” said Gary Hufbauer, a trade expert at Washington’s Peterson Institute for International Economics. “Canada will play along with this Kabuki game and will come to some agreement at the end of September.”

Dan Ujczo, an Ohio-based trade lawyer who monitors the talks closely, agreed that Congress would be unlikely to balk if negotiations with Canada bled into next week, delaying the final text.

But he said Canada faces serious risks if talks wind on much longer, including a continuation of U.S. steel and aluminum tariffs — and President Donald Trump’s threat of similar levies on auto imports.

“It is a real deadline,” said Ujczo. “Once we move past the end-of-September deadlines, the procedural and political issues become much more challenging and unpredictable … Stringing this out does come with economic consequences.”

Miller called the deadline talk an attempt, in part, to pressure Canada into reaching a speedy agreement and make concessions that could end up being costly.

Canadian officials led by veteran negotiator Steve Verheul, though, are bargaining hard, to the point of exasperating their American opposite numbers, he said.

“A lot of this is about … psychological warfare,” he said. “(But) Verheul is doing what he always does: stay focused on the substance, stay cool, let the abuse and the accusations roll off him like water off a duck’s back.”