NAFTA talks run up against deadline; US tariffs remain tough issue

Randal Sanchez
October 1, 2018

Word of the deal came as Canadian Prime Minister Justin Trudeau convened a 10 p.m. (0200 GMT Monday) Cabinet meeting to discuss the North American Free Trade Agreement talks.

Canada agreed to join the revised trade deal that the USA and Mexico had signed last month - just hours before a midnight deadline, that allows Mexico's president Enrique Peña Nieto to sign the accord on his last day in office, two people familiar with the talks told The Washington Post. In order to do so, the administration of US President Donald Trump needed to make public the document to allow for a legally mandated 60-day review period.

In addition to the changes to the dairy market in Canada, officials said it includes stronger protections for workers, tough environmental rules, and updates the trade relationship to cover the digital economy and provides "groundbreaking" intellectual property protections, the official told reporters. Canada also wanted to keep a NAFTA dispute-resolution process that the US wanted to jettison.

U.S. negotiators reached a bilateral deal with Mexico late last month.

Earlier Sunday, David MacNaughton, Canada's ambassador to the United States, had said there was "lots of progress, but we're not there yet", before heading back to Washington from Ottawa.

The U.S. Chamber of Commerce has said it would be "unacceptable to sideline Canada, our largest export market in the world".

Negotiators from both sides spent two days talking by phone as they tried to settle a range of hard issues such as access to Canada's closed dairy market and USA tariffs.

"It would be a monumental mistake to do this without Canada", U.S. Senator Ron Wyden of OR, the top Democrat on the Senate committee that oversees trade, said Friday, before the text was delivered. Trump also threatened to tax Canada's auto exports into the United States if it did not agree to America's demands. The pact underpins some $1.2 trillion in annual trade.

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Keeping chapter 19 will not affect Washington's enforcement of anti-dumping and anti-subsidy laws, said a USA official.

Canada and Mexico are the United States' two biggest export markets.

Among other things, the negotiators battled over Canada's high dairy tariffs.

The United States and Mexico want to push a deal they separately negotiated through their respective legislatures before Mexican President-elect Andres Manuel Lopez Obrador takes office on December 1. It was unclear, however, whether Trump had authority from Congress to pursue a revamped NAFTA with only Mexico, and some lawmakers said they wouldn't go along with a deal that left out Canada.

US lawmakers and business have urged the administration to keep Canada in the deal but the trilateral nature had been in jeopardy after Trump on August 27 announced he reached a deal with Mexico that Canada could join if it's willing to make concessions. And only vehicles that failed to meet the rules of origin for auto parts agreed to by the US and Mexico would even potentially be subject to the proposed auto tariffs.

Any agreement requires the approval of both Trudeau and U.S. President Donald Trump.

The deal represents a win for Trump, who has derided Nafta for years and threatened to pull the United States from the pact if it was not rewritten in Washington's favour.

Reports say that Canada has made concessions on dairy market access that are slightly higher than under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

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