Canada 'cautiously optimistic' a NAFTA deal is in hand, ambassador says, as deadline draws near
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Canada’s ambassador to Washington says he is optimistic a renegotiated NAFTA could soon be had, telling reporters Sunday that officials are working furiously to secure a trilateral deal hours out from a U.S.-imposed deadline of Oct. 1.
“It’s good — we’re working hard,” David MacNaughton said after leaving Prime Minister Justin Trudeau’s office in Ottawa Sunday. “We’ve been at it for a long time so, you know, I’m cautiously optimistic but we’ll see.”
Foreign Affairs Minister Chrystia Freeland and senior members of Trudeau’s team, including his principal secretary, Gerry Butts, are holed up in Ottawa, connected via video link to their counterparts in the U.S., furiously negotiating some final details of the trilateral trade deal.
Both sides have their eyes on a fast-approaching deadline of midnight tonight. Senior Canadian sources, with direct knowledge of the situation, told CBC News there is reason for optimism.
“We’re close,” a senior source told CBC’s Katie Simpson. “The elements for a deal are there, they just have to see if they can get it across the goal line.”
Tariff standoff
Sources said the two sides are narrowing in on a resolution to some sticking points that have long stood in the way of a deal: greater U.S. access to Canada’s dairy market, which is heavily protected by a system of supply management, and the maintenance of some sort of dispute resolution process.
Canada has sought to maintain Chapter 19 of the original NAFTA, the dispute settlement mechanism used to challenge anti-dumping and countervailing duty cases, which Canada has deployed in the past over the softwood lumber file.
What remains less clear is how Canada’s demands for relief from punitive U.S. tariffs on steel and aluminum exports will be resolved, sources said.
Those tariffs were levied on “national security” grounds using presidential authority granted under Section 232 of the Trade Expansion Act of 1962, which gives the president broad powers to impose tariffs without consulting Congress. Canada responded to Trump’s move with counter-tariffs on billions of dollars worth of U.S. goods.
While technically separate from ongoing NAFTA talks, the U.S. has used the threat of further 232 tariffs on autos to extract concessions from Canada and Mexico — a frightening proposition for the Canadians.
According to the U.S. Trade Representative, Canada ships more than $56 billion worth of autos — cars and parts alike — to the U.S. each year. The auto industry employs more than 120,000 people in Canada, with most of those jobs concentrated in southwestern Ontario.
Busy weekend
Canadian officials met late into the night Saturday, and returned to the office by 7 a.m. Sunday morning, in the hopes of getting to an agreement.
Things kicked into high gear on Saturday morning when Freeland abruptly shifted her planned UN General Assembly speech to Monday.
Officials at Global Affairs confirmed to CBC News that her rescheduling was related to NAFTA talks, and another Canadian official may have to give her Monday speech.
While there is a sense of optimism among Canadian negotiators, one of Trump’s senior advisers appeared on cable news Sunday repeating the American threat to move on without Canada, if it will not fall in line by midnight.
Minister of Foreign Affairs Chrystia Freeland and Gerald Butts, senior political advisor to Prime Minister Justin Trudeau, walk in the loading dock of the Office of the Prime Minister and Privy Council where NAFTA talks are being held. (Canadian Press)
By Monday morning, “You’ll have some news one way or the other,” U.S. trade adviser Peter Navarro said on Fox News Sunday morning.
“Everybody’s negotiating in good faith right now as we speak … So it’s either going to be the text goes in with Mexico and the U.S., or the text goes in with all three countries.”
U.S. negotiators are gunning for a new NAFTA by month’s end to get a text of the agreement to Congress for its mandatory 60-day review period. That could allow for a deal to be signed before Dec 1., when Mexico’s new, left-leaning president takes office.
Under U.S. law, while Congress can extend fast track negotiating authority to Trump administration officials — as it has with NAFTA — legislators retain the right to review any proposed trade agreement and decide whether it will be implemented. That relationship is governed by a set of strict, legislated timelines that allow Congress enough time to study a deal before delivering a decision.
Significant issues unsolved
Three of the major outstanding issues between Canada and the U.S. leading up to this week were Section 232 national security tariffs, NAFTA’s Chapter 19 dispute resolution mechanism, and regulations around Canada’s dairy sector.
A bulk of Canada’s efforts this weekend have been focused on securing an exemption to the Section 232 tariffs — especially dealing with autos — a source with direct knowledge of the talks confirmed.
On top of that, Canada’s tariffs on foreign dairy imports that exceed an established quota — which can run as high as 300 per cent — have long been a personal irritant for Trump.
Trump has railed against Canada’s dairy sector since the 2016 presidential campaign, thanks in part to the savvy lobbying efforts of some dairy farmers in swing-state Wisconsin, who have Trump convinced that Canada’s supply-managed dairy system is to blame for hardship in the farm belt.
Watch: Last minute NAFTA talks
At the outset of the NAFTA talks, the U.S. demanded Canada dismantle supply management entirely — something that Trudeau has long maintained is a non-starter.
“We will always defend our supply management system,” Trudeau told reporters earlier this summer.
The United States, in contrast, has maintained support for the farming sector through subsidies. Americans foot the bill for farm supports indirectly through income taxes, while Canadians pay for those supports directly, via higher prices for supply-managed products.
A Mexican intervention?
Last month, Trump announced his negotiators had reached a bilateral deal with Mexico.
He outlined the deadline — Sept. 30 at midnight — for the text of that deal to be submitted to Congress. Canada would be allowed on board, he explained, but they’d have to agree to the terms spelled out in the bilateral agreement.
Trump made it clear Canada’s failure to join would be unacceptable, with hefty auto tariffs as a consequence.
Mexico’s new president-elect, however, said in an interview Friday that he has agreed to push the American side to make a deal with Canada.
President-elect Andres Manuel Lopez Obrador said Prime Minister Justin Trudeau asked him during a Thursday phone call “to intervene and call on the U.S. government to reach an agreement” with Canada on the renegotiation of NAFTA.
“We agreed to that,” Lopez Obrador told reporters in Mexico City. The president-elect also said he would insist on a trilateral pact.
However, later Friday evening, Lopez Obrador’s Senate leader, Ricardo Monreal, said Mexico wouldn’t walk away from a bilateral agreement.
“The ideal is a trilateral deal, but we’re prepared for the possible need of a bilateral,” he told Bloomberg News.
Article source: http://www.cbc.ca/news/canada/hamilton/stuart-mclean-archives-1.4409455?cmp=rss
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