NAFTA 2.0 appears to be within reach

Both Trump and Trudeau upbeat about progress made so far

WASHINGTON — A deal on an overhaul of the North American Free Trade Agreement appears to be within reach, as Canada and the United States were set to continue negotiations on Thursday aimed at getting the pact done by the end of the week.

The two sides will resume their talks with a face-to-face between Canada’s Foreign Minister Chrystia Freeland and US Trade Representative Robert Lighthizer as they seek a breakthrough.

Despite US President Donald Trump’s threats to leave Canada on the sidelines after announcing a breakthrough with Mexico on Monday, Trump and Canadian Prime Minister Justin Trudeau expressed optimism a deal was close.

The White House plans to notify Congress on Friday of its intention to enter into a new free trade agreement, to provide the required 90 days’ notice that would allow NAFTA 2.0 to be signed by December 1, when Mexico will install a new president.

But that will mean compromises on both sides on issues that have created friction between the neighboring countries, notably Canada’s dairy trade rules and mechanisms to settle disputes, as the leaders each try to claim victory.

“I think they’re going really well,” Trump said of the Canada talks, which are “probably on track” to meet the Friday deadline.

“I think Canada very much wants to make the deal,” he said, but again raised the possibility of doing a separate deal with Mexico.

The crucial phase of talks began Tuesday continuing late into the night, and Trudeau expressed optimism the countries could reach agreement by the end of the week.

“There is a possibility of getting to a good deal for Canada by Friday,” Trudeau said. But “no NAFTA deal is better than a bad NAFTA deal”.

Mexico paved the way by agreeing to a NAFTA 2.0 with the US on Monday.

“Our officials are meeting now, and we’ll be meeting until very late in the night,” Canada’s Foreign Minister Chrystia Freeland told reporters on Wednesday. “We have agreed at the ministerial level, we will reconvene to review the work of officials overnight tomorrow morning.”

But she declined to comment on the state of the talks, saying: “Given the extreme intensity and the very fast pace of this conversation, we are not going to conduct our negotiation in public.”

A good thing

The Friday deadline is probably a good thing insofar as it has Canada at the table again, said John Ries, an international trade expert from the University of British Columbia.

“Both sides have known what the issues are and what each side is proposing, but they haven’t really sat down and worked really hard at coming up with compromises,” Ries said on Wednesday.

“This is creating a lot of focus to really resolve issues that they’ve known about and they’re not going to get resolved by not talking.”

If the White House notifies Congress by Friday, it then would have until September 30 to submit the final NAFTA agreement.

The sticking points between Ottawa and Washington likely will center on Canada’s managed dairy market and how to handle some disputes among NAFTA partners.

Negotiators have worked for a year to update and rewrite the 25-year-old free trade pact. But in the last five weeks, Washington and Mexico City held talks to resolve their bilateral issues, especially on the auto industry rules, without Ottawa.