WASHINGTON Despite a furious few days of talks and intense pressure from President Donald Trump, U.S. and Canadian officials failed to meet a White House-imposed deadline of Friday to reach a deal on a revamped North American Free Trade Agreement.
Missing Trumps cut-off date, in itself, does not imperil a renegotiated NAFTA, which also includes Mexico. Senior Canadian and U.S. negotiators plan to resume talks Wednesday to discuss Canadas protected dairy market and other areas of dispute.
The talks were constructive, and we made progress, U.S. Trade Representative Robert Lighthizer said at the conclusion of Fridays negotiations in Washington.
Foreign Affairs Minister Chrystia Freeland agreed that progress was made. She said a deal is still within reach, but insisted that Canada will only sign a new agreement if it benefits Canada and Canadians.
The longer the discord remains, however, the greater the risk that a trilateral accord will be pushed out much further into the future, or that Trump will scrap NAFTA altogether and go with a bilateral deal with Mexico, which he has threatened to do.
And Trumps Twitter confirmation Friday that he had told Bloomberg News on Thursday that he would not compromise with Canada on trade did not help the prospects for a quick or easy settlement.
Earlier last week Trump heaped pressure on Canada by announcing that the U.S. and Mexico had come to terms on a revised NAFTA and that he would move ahead with a separate U.S.-Mexico agreement if Ottawa did not come on board by Friday. Moreover, Trump threatened to slap tariffs on Canadian autos.
As his deadline passed, Trump delivered a notice to Congress that he intended to enter into a trade agreement with Mexico and with Canada if it is willing by the end of November.
Business groups and some members of Congress said they were encouraged that the U.S. was continuing to negotiate with Canada, but others criticized Trumps notification to Congress as premature and called into question the presidents strong-arm approach to trade.
The Friday deadline that Trump set and his hardball tactics did bring Canada hurriedly back to the bargaining table after several weeks of being on the sidelines as the U.S. and Mexico negotiated. But they still werent enough to push Canada to a speedy compromise, as there were thorny issues to resolve and in part perhaps because the Friday cutoff didnt have as much weight as some may have initially thought.
The deadline was meant to satisfy a congressional procedural requirement for a 90-day notice before a new NAFTA could be signed. The U.S. and Mexico wanted to ensure that the current Mexican president, Enrique Pena Nieto, could sign the agreement before he leaves office Nov. 30. Technically speaking, that meant the notice of a trilateral deal had to be given by Friday.
But experts said that rule didnt appear to be so rigid. A drop-dead date for the parties to agree to a deal looks to be closer to Sept. 30, because the so-called trade promotion authority granted to Trump calls for a full text of a revised NAFTA agreement to be made public within 30 days after the notification is given.
If Pena Nieto doesnt end up signing, and responsibility for NAFTA talks passes onto the incoming Mexican president, Andres Manuel Lopez Obrador, many believe it will complicate and delay efforts for a completion of a new agreement. For this reason, Mexican officials seemed eager to sign a deal with Trump, even making concessions and risking leaving Canada out of the equation.
Political considerations are working in reverse for Canada, said Wendy Cutler, who has led trade negotiations for former Presidents George W. Bush and Barack Obama. Trump has imposed steel and aluminum tariffs on Canada, and is threatening to slap hefty duties on Canadian cars. He has also insulted Canadian Prime Minister Justin Trudeau, calling him very dishonest and weak. The result is that Trump is highly unpopular in Canada.
Canada is being jammed and squeezed, and it just complicates Canadas ability to move, Cutler said. She thinks its still possible for the U.S. and Canada to reach an agreement in September, but said that it may go down to the wire. Canada, for domestic purposes, may need to fight to the bitter end.
Besides disputes over Canadas dairy supply system, the U.S. and Canada remain at odds over intellectual property rights and the Trump administrations bid to weaken or eliminate special NAFTA courts that Canada has used to fight U.S. anti-dumping tariffs on lumber and other goods.
Despite domestic pressures to stand up to Trump, Trudeau may have little choice but to make significant concessions. The country is one-tenth of the U.S. in population and economy, and depends much more on exporting to the United States than the other way around.
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