Impasse may foil deal by deadline
Ottawa’s firm stance leads to uncertainty on reaching agreement by next week
OTTAWA— With less than a week to go until a U.S.-imposed deadline for a new North American trade pact, slow progress on key issues has cast doubt on whether Canada and the U.S. can strike a deal on time, a Canadian official says.
Among the sticking points is a concession Mexico made to the U.S. that exempts some online purchases from sales tax. Canada is not willing to go there.
That impasse, along with other obstacles, could prevent formal negotiations from resuming in time to meet the Sept. 30 deadline set by U.S. President Donald Trump for Canada to sign on to the deal already struck between the U.S. and Mexico. Trump has said a new North American trade deal will be sent to Congress next week, with or without Canada on board.
The deal with Mexico raises the dutyfree exemption for online shopping to $100, but also exempts online purchases of less than $100 from sales tax, said a Canadian official, speaking on condition of anonymity to discuss the issues at play.
“If you applied that to Canada, for example, if you went online to CanadianTire.ca and bought something for $80, you’d have to pay the GST (sales tax), but if you went on to Amazon in the U.S., if we were to accept what the Mexicans have done, then Canadians would not have to pay,” the official said.
“It would just be a fundamental unfairness that we cannot abide. So, it is the view of the Canadian government that giving an unfair tax advantage to U.S. retailers over Canadian retailers is just not on.”
Since Thursday, when Foreign Affairs Minister Chrystia Free- land left Washington, both sides have put forward their views on a range of issues, but not much has changed, said the official.
Trump and Prime Minister Justin Trudeau are not expected to sit down face to face as they attend the United Nations General Assembly this week.
The Canadian official said Freeland was in touch with her counterpart, U.S. Trade Representative Robert Lighthizer, over the weekend, and it is likely the two will meet Tuesday on the UN sidelines, along with Trudeau’s chief of staff, Katie Telford, and Trump’s son-inlaw and key adviser, Jared Kushner.
Canada still insists there must be a robust, rules-based system to resolve trade disputes between countries, such as that contained in Chapter 19 of the current NAFTA.
“It is Canada’s strong view that, particularly on Chapter 19 but also some other issues, we need to see further movement from the United States if we’re going to get there,” said the Canadian source.
Other sticking points remain, including Canada’s desire for assurances that the U.S. will lift its 25 per cent tariff on Canadian steel and 10 per cent tariff on aluminum. Canada also wants the U.S. to drop its latest threat — to impose a 25 per cent tariff on Canadian automotive exports to America — and its demand that Canada open its cultural industries to U.S. investment.
“In a perfect world, we’d have this wrapped up this week so that the deal can move forward seamlessly,” said the official.
Meanwhile, the association representing Canada’s generic drug makers on Monday released results of a public opinion survey it commissioned, expressing concern over another concession Canada may possibly make.
The survey suggests most Canadians put a high priority on access to affordable prescription medicines and are worried that Canada could agree — as Mexico did — to extend patent protection in the pharmaceutical sector to 10 years.
In a written statement, Jim Keon, president of the Canadian Generic Pharmaceutical Association, urged the Canadian government to “not trade away timely access to generic and biosimilar medicines in a new NAFTA.”
“Any such concessions would be harmful to Canadians, harmful to our industry and provide an enormous gift to the brand-name pharmaceutical industry — an industry that already enjoys some of the highest prices in the world for their products.”