Trump projects NAFTA deal with Canada
Timing critical as deadline looms for Congress
WASHINGTON — After a year of threatening to end the North American Free Trade Agreement, President Donald Trump notified Congress on Friday that he plans to sign a new trade deal with Canada and Mexico after days of talks with Canadian officials that a White House official called “constructive.”
The United States and Canada have yet to complete negotiations, but the move marked a significant step forward in what has been an uneven and at times volatile process to revamp the 25-year-old pact.
“We are on pace to complete an agreement with Mexico and hopefully with Canada,” a senior White House official said Friday. “The talks (with Canada) were constructive, and we’ve made progress.”
Trump had set a Friday deadline for the United States and Canada to reach a deal on NAFTA following a preliminary agreement with Mexico on Monday. U.S. and Canadian officials are scheduled to resume talks Wednesday, the official said.
The timing of this week’s trade talks with Canada
was seen as critical, because the White House is trying to sign a new trade pact before Mexican President Enrique Peña Nieto leaves office Dec. 1, and Congress is required to take 90 days for review. But the White House could have flexibility under federal trade law.
The White House must notify Congress of a trade deal 90 days ahead of time, but it is only required to submit the language of that trade deal 60 days ahead of time, said Josh Zive, a Washington trade attorney with the law firm Bracewell.
“Congress could be notified of an agreement in principle today, either with both parties or only with Mexico, and Canada could be added in during the next 30 days,” Zive said.
Talks key to Texas
The talks with Canada and Mexico are particularly critical for Texas, where trade with Mexico and Canada accounts for more than 1 million jobs. From warehouses and logistics operations along the Mexican border to Gulf Coast refineries that rely on crude from Canada and Mexico, the state’s economy has become increasingly reliant on trade since NAFTA was signed in 1993.
Trump has told Canada it needs to end tariffs on U.S. dairy products or else face U.S. tariffs on Canadian-made automobiles. Canada has refused to meet Trump’s demands on the dairy tariffs, which it argues serve to support its domestic dairy industry in much the same manner the United States maintains a federal crop insurance program to aid its farmers.
Tensions rose Friday when the Toronto Star reported that, in an off-the-record conversation, Trump had told reporters from Bloomberg News he had no intention of compromising with Canadian Prime Minister Justin Trudeau.
“Here’s the problem. If I say no — the answer’s no,” Trump reportedly said. “If I say no, then you’re going to put that, and it’s going to be so insulting they’re not going to be able to make a deal.”
Canada priority in deal
Without Canada in the trade deal, Trump could face a tough road winning approval from Congress. Republicans and Democrats have raised their objection to a bilateral deal with Mexico. Speaking with reporters Wednesday, Senate Majority Leader John Cornyn, R-Texas, said without Canada it would, “reduce the likelihood that it would actually be approved.”
But when pressed as to whether he would support a bilateral deal with Mexico, Cornyn said, “I continue to believe it would be preferable to have a deal with Canada as well, but I think a deal with Mexico is better than no deal, and I would support that.”
At the same time, Trump’s volatile negotiating style is starting to grate on some in Congress, who are used to the quieter, behind-the-scenes approach of previous administrations.
“In typical Trump fashion, amidst ever more insults, the administration spins a non-agreement into an agreement,” Rep. Lloyd Doggett, D-San Antonio, said in a statement. “He provides us no specific language, only boasts about what a great deal he has achieved.
“Though Trump may be satisfied to claim victory by changing NAFTA’s name, many of us are committed to genuine reform.”
Delicate negotiations
Trump has long called NAFTA the worst trade deal in history. And under the recent agreement with Mexico, White House officials said the United States would increase its share of car manufacturing and the trade agreement would operate on 16-year terms, with a review at least every six years, to allow countries to address trade imbalances.
For now, most political observers believe Canada, which sends close to 75 percent of its exports to the United States, will ultimately have to make a deal with Trump.
But some question at what cost to the relationship between the two countries.
“The U.S. has all the leverage in the world, but just because you can doesn’t mean you should,” Bruce Heyman, the former U.S. ambassador to Canada, said on CNBC Friday. “The relationship will be damaged much longer than it takes the ink to dry on this agreement if we keep squeezing Canada.”