US, Canada race against dead­line on ‘new Nafta’

DAIRY TRADE RULES A MA­JOR STUM­BLING BLOCK AS LEAD­ERS LOOK TO CLAIM VIC­TORY

The Nation - - WORLD BUSINESS -

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

The two sides will re­sume their talks with a face-to-face meet­ing 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 planned to no­tify Congress to­day 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 neigh­bour­ing 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 to­day’s 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 on 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 United States 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.”

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

Ne­go­tia­tors have worked for a year to update and re­write the 25year-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.

While crit­ics said Canada had been frozen out, Free­land has re­peat­edly stressed that she re­mained in close touch with her US and Mex­i­can coun­ter­parts through­out the sum­mer and had al­ready achieved “a high-level agree­ment with the US” on some of the pend­ing is­sues on au­tos and labour rights.

Con­ces­sions

She also has met this week with her Mex­i­can coun­ter­parts, who re­mained in Wash­ing­ton af­ter an­nounc­ing the break­through with the United States.

Free­land praised Mex­ico’s will­ing­ness to make dif­fi­cult con­ces­sions on auto trade and labour is­sues, which helped pave the way for a three-party agree­ment.

The new Nafta in­cludes a higher per­cent­age of lo­cally-pro­duced com­po­nents in au­tos, a re­quire­ment that a per­cent­age of ve­hi­cles must come from high-wage fac­to­ries, tougher worker pro­tec­tions and a re­view of the 16-year deal ev­ery six years.

Trudeau vowed not to give in to Wash­ing­ton’s de­mands to al­ter the sys­tem un­der which Ot­tawa sets dairy pro­duc­tion quo­tas and prices, with steep tar­iffs on im­ports.

But Ot­tawa could of­fer US dairy farm­ers a small in­crease in mar­ket share as it did with the EU in a free trade pact last year, in ex­change for US con­ces­sions on the Nafta chap­ter on dis­pute res­o­lu­tion.

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