White House-canada NAFTA negotiations falter

Talks will resume Wednesday

WASHINGTON – Highstakes trade negotiations between the White House and Canadian leaders unraveled Friday, a major setback in President Donald Trump’s effort to redraw the North American Free Trade Agreement.

An impasse over prices for dairy products was further inflamed by private comments from Trump suggesting that he would refuse to offer Canada any concessions, placing in legal limbo his administration’s plans of reaching a new trade agreement with the United States’ neighbors.

After it became clear a deal was no longer in reach, Canadian Foreign Minister Chrystia Freeland said Friday afternoon that her government would not sign onto an agreement unless it was good for Canadians. “My job is to ensure this agreement works for Canadian workers, Canadian families and Canadian businesses,” she said.

The trade talks are to resume Wednesday, with U.S. and Canadian negotiators saying they would still seek consensus.

But Trump seemed willing to leave Canada out of a final deal to rework the regional trade pact, and replace the three-nation NAFTA with a bilateral trade agreement with Mexico.

“If we don’t make a deal on Canada, that’s fine,” Trump said Friday at an event in Charlotte.

Trump took a step in that direction later Friday, formally notifying Congress that he would enter into a trade agreement with Mexico. He stipulated in a letter that Canada could be added “if it is willing.”

Sending the letter to Congress begins a 90-day process for reworking the trade deal, a deadline the White House believes is necessary to get approval from the outgoing government in Mexico before President Enrique Peña Nieto leaves office Dec. 1.

But it is unclear whether a three-nation trade pact can be replaced under congressional rules with a two-nation agreement, and Trump needs Congress to sign off on any changes to NAFTA – a voting process that could take months or even years.

It is also unclear how the Mexican government will respond to Trump’s bid to cut Canada out of the freetrade agreement, a quarter-century after the original NAFTA was signed. “The notification sent by the U.S. represents a step forward in the formalization of the understanding reached between Mexico and the U.S. in relation to NAFTA,” Mexico’s Mexican Secretary of Economy Ildefonso Guajardo said in a statement. “Mexico will participate in the negotiation of trilateral issues, while continuing to promote an agreement to which Canada is a party.”

Reworking NAFTA is one of Trump’s primary economic and foreign policy goals. He has said the 1994 deal decimated much of the U.S. manufacturing industry, causing companies across the Midwest to close factories and move jobs to Mexico.

Trump reached an agreement with Mexican leaders on Monday on a smaller trade deal that he said could replace NAFTA, but a number of GOP lawmakers have made clear they will support changes only if Canada is involved.

Trump is expected to try to ratchet up economic pressure on Canada in the coming days to force Canadian Prime Minister Justin Trudeau to capitulate, a person briefed on the strategy said, speaking on the condition of anonymity to discuss sensitive deliberations.

Trump has imposed tariffs on steel and aluminum imports from Canada and other countries as a way to try to force trade concessions.

And he is strongly considering extending similar tariffs to all automobiles and auto parts sent from Canada to the United States to further strain Canada’s economy.

Trump’s letter to Congress capped a chaotic day of posturing and brinkmanship between the United States and one of its closest allies. The United States and Canada appeared to be within striking distance of a deal Thursday, but they could not agree on U.S. demands over dairy policy, and there were also differences about patent protections for pharmaceuticals, and over trade-dispute resolution.

Canadian officials felt that the U.S. team was not willing to budge, a sentiment that appeared to be validated Friday morning when the Toronto Star published off-the-record comments Trump had made one day earlier to Bloomberg News.

Trump told Bloomberg journalists that negotiations to rework NAFTA would take place only on his terms.

Trump later confirmed making the comments, though he complained that they had not been intended for publication.