U.S. AND CANADA REACH BASIS OF FREE-TRADE DEAL
Toronto — A senior Canadian government official said late Sunday that the U.S. and Canada have reached the basis of a free trade deal.
The official says the agreement preserves a NAFTA dispute-resolution process that the U.S. wanted to jettison.
The official also says it exempts tariffs on 2.6 million cars, and on dairy it preserves supply management in Canada and agrees to give similar market access like the Trans Pacific Partnership that U.S. President Donald Trump scrapped.
Canadian Prime Minister Justin Trudeau called a meeting with his Cabinet after Canada and the U.S. made substantial progress in talks. The U.S. and Canada were under pressure to reach a deal by the end of the day.
Canada late Sunday agreed to join the trade deal that the U.S. and Mexico announced last month, with a public announcement expected before a self-imposed midnight deadline designed to allow the current Mexican president to sign the accord on his final day in office, according to two people familiar with the talks.
Diplomats from all three countries engaged in a flurry of telephone consultations over the weekend, reviving hopes of preserving the three-country format of the original North American Free Trade Agreement favored by business groups and congressional Republicans.
The new treaty is expected to be signed by President Donald Trump and his Canadian and Mexican counterparts in 60 days, with Congress likely to act on it next year.
Administration officials anticipate a fierce political battle to win congressional approval, especially if Democrats regain control of the House of Representatives in November.
“We will enter October with a trilateral North American trade deal,” said Dan Ujczo, a trade lawyer with Dickinson Wright. “This was the least difficult part. The heavy lift is going to be getting a trade deal through the next Congress in 2019 as well as ratification by Mexico’s new Congress and in Canada during a federal election year.”
Securing a replacement for the nearly 25-year old NAFTA would be a major accomplishment for Trump and his chief trade negotiator, Robert Lighthizer. The president, long a NAFTA critic, complains that the original treaty cost the United States millions of factory jobs and led to persistent U.S. trade deficits with its southern neighbor.
Last year, the U.S. goods imports from Mexico exceeded exports by $71 billion.
Sunday morning, Peter Navarro, one of Trump’s closest White House trade advisers, said negotiators were working “in good faith” to reach a three-country deal by midnight and had reached “broad agreement” on most issues.
“There are several sticking points,” he acknowledged.
One of the toughest obstacles was Canada’s demand for an exemption or other form of protection from the president’s tariffs on imported steel and aluminum, which may potentially be extended to automobiles from Canadian factories.
Canada is expected to agree to some form of quota on its shipments to the United States, according to two sources briefed on the talks who asked for anonymity.