Justin Trudeau, Canada’s prime minister, and Donald Trump, the US president, said a deal on revamping Nafta by Friday was within reach as talks intensified in Washington to salvage the three-way agreement that governs billions of dollars of trade across North America.
Speaking to reporters from Ontario, Mr Trudeau cited differences over trade in dairy products, a longstanding source of friction with the US, as one of the key sticking points, but said an agreement could still be struck by the end of the week.
“We recognise that there is a possibility of getting there by Friday, but it is only a possibility, because it will ultimately hinge on whether there is ultimately a good deal for Canada,” Mr Trudeau said. “No Nafta deal is better than a bad Nafta deal,” he added.
Shortly afterwards, Mr Trump chimed in. “[Canada] want to be part of the deal, and we gave until Friday and I think we’re probably on track. We’ll see what happens,” the US president said.
The two leaders’ remarks came after Chrystia Freeland, Canada’s foreign minister, held a second negotiating session with Robert Lighthizer, the US trade representative, in Washington, with a third in the afternoon, which was joined by Jared Kushner, the US president’s aide and son-in-law.
Ms Freeland said there was reason to be optimistic, since Mexican concessions had paved the way for a deal on cars with the US that Canada was prepared to accept. But she added that there was still a “huge amount of work to do”, suggesting that there are still plenty of obstacles to overcome.
One of the main areas of horse-trading is likely to be Canada’s so-called supply management system. This protects the country’s dairy and poultry producers and has long been a target for the US and other countries who want a more open market in that sector.
Canadian officials have rejected the idea that they would scrap it altogether in order to reach a deal with the US, meaning a compromise would have to be found. Another contentious area is dispute settlement: in the US deal with Mexico, the parties agreed to limit dispute settlement panels to heavily regulated industries such as oil, gas, infrastructure and telecommunications.
But Canada would like it to be much broader, for example extending it to the lumber industry, a key industry for Ottawa. Another Canadian demand has been a cultural exception, partly to protect the indigenous and French-speaking communities in Canada.
Canadian officials are also expecting that any agreement would include a commitment to ending US tariffs on aluminium and steel, which were imposed on national security grounds this year, causing ire in Ottawa.
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Mr Trump has sought to put pressure on Canada by saying that his administration was prepared to move ahead with the Nafta revamp only with Mexico even if Canada did not agree to the deal.
One Republican congressional aide said the Friday deadline truly put Canada on the spot. “That’s not a lot of time for anybody to review a deal, even a deal they mostly would be able to live with, and come to a decision,” he said. “It’s very tight.”
US congressional approval of a Nafta revamp could be complicated anyway, as trade votes often are on Capitol Hill. But a bilateral deal with Mexico would be much more difficult to secure for the US administration, than a pact including Canada. US business lobby groups — who have a significant influence over Republican lawmakers on Capitol Hill — have been consistently insisting that any deal should be trilateral, given the large economic ties with Canada.
As the negotiations continued, Canada notched up a separate trade victory on newsprint after the International Trade Commission ruled that Canadian paper imports into the US did not hurt US producers.
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