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NAFTA deal: Us, Canada near agreement despite Trump, Trudeau fight

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Donald Trump and Justin
Trudeau

Leon Neal/Getty
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  • The Trump administration set a deadline of Sunday for Canada
    to agree to a revised version of the North American Free
    Trade Agreement.
  • To step up the pressure, President Donald Trump and US
    officials threatened to leave Canada behind and sign a bilateral
    deal with Mexico unless the Canadians agree to a deal by the
    deadline.
  • The pressure appears to be working as reports indicate the
    two sides are closing in on a deal.
  • But there are still several issues outstanding, including
    dairy tariffs and trade-dispute resolution.

The US and Canada are reportedly working furiously to reach a
deal over revisions to the North American Free Trade Agreement
(NAFTA).

According to multiple 

reports
, the two countries are closing in on an agreement to
update the two decade-old trilateral trade deal and an
announcement could come as soon as Saturday.

The intense negotiations come hours before the Trump
administration’s Sunday deadline
for Canada to sign on to a
new bilateral trade deal between the US and Mexico. Absent an
agreement, the administration threatened the two countries will
move forward without their northern neighbor.

This also represents a major turnaround from earlier in the week
when Trump
hurled insults
at his Canadian counterparts during a press
conference, prompting a strong reply from Prime Minister Justin
Trudeau.

While no deal is guaranteed, the two sides appear to be closing
in on the the NAFTA rewrite.

Pressure to get a deal done

The US-imposed deadline was designed to secure a deal before
Mexican President Enrique Peña Nieto leaves office on
December 1. The law under which the US is renegotiating NAFTA
requires Trump to notify Congress 60 days before a signature, so
Sunday appeared to be the last day to get Canada into the deal to
ensure Nieto can sign the agreement. 

The Trump administration is hoping to avoid the possible
reopening of negotiations by Nieto’s successor, Andrés Manuel
López Obrador, which could add more political uncertainty.

Early signs that progress was being made came Friday when
the release of the US-Mexico bilateral trade deal’s official text
was pushed back with little explanation. Mexican Economy
Minister Ildefonso Guajardo told reporters after announcing the
delay that the US and Canada were attempting to reach an
agreement in the short-term.

“At this moment there’s a very serious attempt to continue
advancing in the process of finalizing the differences in
bilateral issues between the U.S. and Canada,” Guajardo
said.

Rumblings that progress was being made grew louder
when Chrystia Freeland, Canada’s minister of foreign
affairs and the country’s chief negotiator in the NAFTA talks,
pushed back a planned speech at the United Nations on Saturday in
order to continue talks.

Freeland, as well as other key Canadian officials, returned
to the capital of Ottawa on Saturday to make progress on
negotiations.

US threatened to move on without Canada

The growing possibility of a deal comes after Trump’s team
attempted to put pressure on Canada with threats to move forward
with the bilateral US-Mexico deal.

I think Canada wants to do it, I know we want to do it,”
US Trade Representative Robert Lighthizer said
Tuesday
. “We’ll
see whether it happens, we’re sort of running out of
time.”

Despite the threats, Canadian officials did not appear
ready to make concessions — and the country received the support
of some

 notable allies.

Mexico is not committed to moving forward with the US on an
exclusively bilateral basis and incoming president López Obrador

told reporters on Friday
that his administration would push
Trump to maintain the trilateral nature of NAFTA.

Also bolstering Canada’s position are US lawmakers in both
parties. Both Republicans and Democrats have stressed that a
bilateral deal between the US and Mexico will likely not get the
votes needed to ratify the agreement and Canada should stay in
the deal.

A turnaround from Trump’s attacks

The possible deal also comes as a surprise given earlier
pessimism that an agreement could be reached before the deadline
and the barbs traded between Trump and Trudeau earlier in the
week.

When asked about the state of NAFTA negotiations with Canada,
Trump told reporters at a press conference Wednesday that he
rejected a request for a meeting from Canadian Prime Minister
Justin Trudeau.

Because his tariffs are too high, he doesn’t seem to want
to move and I’ve told him forget about it,” Trump said when asked
why he turned Trudeau down. “And frankly we’re thinking about
just taxing cars coming in from Canada, that’s the mother load,
that’s the big one. We’re very unhappy with the negotiations and
the negotiating style of Canada.”

Trudeau’s office told Business Insider that they made no
request for a meeting.

Trump also took a shot at Chrystia Freeland, Canada’s
minister of foreign affairs and the country’s chief negotiator in
the NAFTA talks.

“We’re very unhappy with the negotiations and the
negotiating style of Canada. We don’t like their representative
very much,” Trump said.

Trudeau pushed back on Trump’s comments about Freeland and
the state of negotiations on Thursday.

“The Americans are finding that negotiations are tough
because Canadians are tough negotiators, as we should be,”
Trudeau
told reporters
. “A good and fair deal is still possible, but
we won’t sign a deal that is bad for Canadians.”

Several outstanding issues

Even in the face of the Trump administration’s pressure,
Canada seemed to be sticking strong on a handful of thorny issues
and its unclear where the two sides have come out on these
problems.

According Canadian and US officials over the past few
weeks, the biggest issues going into the talks were:

  1. Canada’s dairy protections: A
    particular sore spot for Trump, the US is demanding that Canada
    give American dairy farmers more access to its market. Canada
    wants to keep the protections in part due to the political
    influence of its country’s farmers.
  2. Trade protection: Another major sticking
    point is Canada’s desire to keep Chapter 19 of the NAFTA deal,
    which created an extrajudicial dispute resolution process that
    allows member countries to contest particular trade policies of
    other members. In fact,
    Trudeau suggested
    that Canada needs Chapter 19 to protect
    itself against Trump’s volatile behavior.
  3. Auto tariffs: According to reports,

    Canada is also seeking assurances
    that
    Trump will not impose tariffs
    on imports of cars and auto
    parts from the country as the president has threatened.
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