Canada gets stern NAFTA warning

Ever since the U.S. struck a surprise, wide-ranging trade deal solely with Mexico last month, defenders of Canadian negotiating tactics have argued there was little to worry about.

After all, they reasoned, Congress would never approve a bilateral NAFTA update that left out its northern neighbour.

But that security blanket seemed rather more threadbare Tuesday after a leading House Republican warned there was “growing frustration” in Congress over Canada’s stubbornness, and urged it to make the concessions needed for a “fair” agreement.

The sharply worded statement from Rep. Steve Scalise, the GOP House whip, echoed comments the White House has been making for weeks, as it pressured Canada to join the accord reached with Mexico.

But coming from Congress — albeit a close ally of President Donald Trump — it marked a significant heating up of talks to revamp the North American Free Trade Agreement.

“There is a growing frustration with many in Congress regarding Canada’s negotiating tactics,” Scalise wrote. “Members are concerned that Canada does not seem to be ready or willing to make the concessions that are necessary for a fair and highstandard agreement.”

Lawmakers would all like to have Canada as part of the accord, but there is not an “unlimited amount of time” for that to happen, warned the Louisiana representative.

Scalise was seriously wounded by a mass shooter last year while practising for a congressional baseball game.

He cited the U.S. law around approval of trade agreements and its requirement that a full text of a new NAFTA be released by Oct. 1. That would enable it to be signed by Mexico’s outgoing president, Enrique Peña Nieto, before he leaves office at the end of November, considered important to ensuring its ratification there.

Some analysts argue Congress would bend such deadlines if it helped facilitate an agreement with Canada, but Scalise said legislators will not “short-circuit” the law.

“Mexico negotiated in good faith and in a timely manner and, if Canada does not co-operate in the negotiations, Congress will have no choice but to consider options about how best to move forward and stand up for American workers.”

While Mexico made significant concessions to reach a deal that even one of its top trade officials admitted recently was less than perfect, Canada has pushed back against U.S. demands on issues like NAFTA’s disputeresolution rules and access to the Canadian dairy market.

Meanwhile, some members of Congress have questioned whether it would be wise, or even legal, to proceed with a trade deal that excluded Canada.

Foreign Affairs Minister Chrystia Freeland was scheduled to resume talks with U.S. Trade Representative Robert Lighthizer in Washington on Wednesday. In response to Scalise’s warnings, her spokesman, Adam Austen, said Canada has been active in an “intensive phase of negotiations” for four weeks.

“We are confident that creative compromises can be found that will enable us to reach a deal,” he said. “That being said, our government is committed to getting a good deal for Canada, not just any deal.”

Some analysts said Tuesday the Canadians should take the new warnings to heart.

Scalise’s statement reinforces the view both in the White House and on Capitol Hill that releasing a text by Oct. 1 is a real deadline — and there is no guarantee Congress would block a Mexicoonly accord, said Dan Ujczo, a U.S. trade lawyer following the talks closely.

As the trade war with China heats up, “members of Congress want trade certainty in the North American backyard, especially in the lead-up to the mid-term elections,” he said

Scalise should be heeded, since, as whip, he has a handle on where Republicans lean on the issue, and could succeed Paul Ryan as GOP House leader, said Chris Sands, head of the Center for Canadian Studies at Johns Hopkins University.

“I see it as a reflection mainly of the Trump administration’s desire to get a deal,” said Sands. “He’s putting out a marker here, sending a shot across the bow.”

Scalise himself felt it was “important for Congress to do their part in keeping the pressure up” , said a source familiar with his reasoning. “This is intended to help the process.”