‘We’re sort of running out of time’
Canada not making NAFTA concessions, U.S. says, as Sept. 30 deadline approaches
NEW YORK Canada is not making concessions needed to reach a deal with the United States for a trilateral NAFTA pact and is running out of time before Washington proceeds with a Mexico-only agreement, the top U.S. negotiator said on Tuesday.
The Trump administration has been urging Canada to conclude a deal by Sept. 30 or face exclusion from a revised North American Free Trade Agreement.
Trade Representative Robert Lighthizer said there was “some distance” between the two sides on issues such as access to Canada’s dairy market and how best to settle trade disputes.
“The fact is, Canada is not making concessions in areas where we think they ’re essential,” Lighthizer said.
“We’re going to go ahead with Mexico,” he said.
“If Canada comes along now, that would be the best. If Canada comes along later, then that’s what will happen.”
He added: “We’re sort of running out of time.”
U.S. President Donald Trump and Prime Minister Justin Trudeau crossed paths Tuesday at the UN General Assembly, but it was hardly a warm encounter.
The two mingled near each other but didn’t speak before Trump sat down for lunch. Trudeau then approached Trump, standing behind him without the president appearing to acknowledge him. Trudeau tapped him on the shoulder and the men shook hands in a brief exchange. Trump didn’t stand up.
Trump has demanded major changes to NAFTA, which he says caused U.S. manufacturing jobs to move to low-wage Mexico. Markets are nervous about the impact on a deal that underpins $1.2 trillion in annual trade.
Canadian officials say that despite the U.S. threats to go it alone with Mexico, they do not believe Trump can by himself turn the 1994 pact into a bilateral deal.
Trudeau spoke before Lighthizer at an event hosted by the Council on Foreign Relations and took a more cautious tone about the outcome.
“They (the United States and Mexico) made certain agreements,” he said. “I think there’s a possibility there to build on what they agreed.”
The Trump administration says the text of a deal is needed by Sunday to allow the Mexican government to sign it before leaving office on Nov 30.
“With Mexico, we’re not going to say ‘no deal’ because of Canada,” Lighthizer said. “That doesn’t make any sense at all, so hopefully we’ll end up with something with Canada.”
Canada also has made clear the United States needs to withdraw Trump’s threat of a 25 per cent tariff on autos for a deal to be possible.
U.S. business groups, alarmed by the potential disruption to the three increasingly integrated economies, have lobbied the White House to keep NAFTA as a trilateral deal.
The office of Foreign Affairs Minister Chrystia Freeland, who sits opposite Lighthizer at the negotiations, did not respond to a request for comment.
The United States, citing security reasons, imposed tariffs on Canadian steel and aluminum in late May. Lighthizer said those tariffs would be addressed once NAFTA had been completed.
Meanwhile, JP Morgan Chase has predicted that a failure to strike a NAFTA deal would see the Canadian dollar tumble by about 10 per cent.
A U.S. withdrawal would likely force the Bank of Canada to slash interest rates, according to analysts including Daniel Hui.
“The worst-case NoFTA could mean USD/CAD at 1.43 as the market prices a ‘safety-net’ 50-basis point cut by BoC,” they wrote in a Sept. 21 note.
“A potential overshoot would also probably be unbound and thus larger versus the best-case scenario, given the large unknowns.”
Fitch Ratings echoed JP Morgan’s concerns in a report on Monday, writing that a “significant tariff or trade shock” could lead the Bank of Canada to pause raising rates in order to help borrowers.
With Mexico, we’re not going to say ‘no deal’ because of Canada. That doesn’t make any sense at all, so hopefully we’ll end up with something with Canada.