NAFTA talks resume in Washington with Oct. 1 deadline looming

Gladys Abbott
September 7, 2018

Data released on Wednesday showed the USA trade deficit hit a five-month high of $50 billion.

When a North American trade agreement was first proposed under President Reagan, it was envisioned not just as a commercial pact among three countries but also as a strategic partnership.

Canada rejoined the talks with the aim of reaching a three-way pact, but Canadian Foreign Minister Chrystia Freeland abruptly ended the last round of talks on Friday with no deal, after derogatory remarks by Trump about Canada were leaked.

Canada and the United States past year traded US$673 billion in goods and services or US$1.3 million per minute, according to USA official data.

Canada's right to limit dairy imports, procedures for arbitrating complaints about USA trade barriers and the life span of any new North American trade deal are likely to dominate deliberations, the analysts said.

During a brief break in the talks, Freeland emerged to say that Canada will stand up for its "national identity" in areas such as media.

Warner said Ottawa could be trying to stress that it's defending a popular issue with Canadians - particularly in Quebec - because it will have to eventually make concessions elsewhere if it hopes to strike a deal.

Trump's frustration spilled into the open over the holiday weekend as he railed against Canada on Twitter - as well as its many supporters in both political parties. The president also said the US would be fine if a deal can't be reached with its northern neighbour.

The U.S. charges that Canada discriminates against its dairy exports. The Trump administration on Friday notified Congress that it intended by the end of November to sign a new trade deal "with Mexico - and with Canada if it is willing". He said they've come a long way with Canada and now he thinks "they will treat us fairly".

Trudeau has taken to saying that "no NAFTA deal is better than a bad deal" as he tours the country.

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For example, Canada is anxious about USA insistence on a sunset clause that would force Canada to recommit every five years to the trade pact or watch it automatically end.

The seemingly inexorable rise in the US Dollar looks to be running out of steam despite continuing market concerns about the US-China trade talks, discussions on a revamped North American Free Trade Agreement (NAFTA) and emerging-market chaos.

Trump almost tore up the NAFTA pact previous year after visiting farmers in Wisconsin, a major USA dairy producer that Washington says has been hurt by Canadian protectionism.

Whatever the pressures on the government, Canada does have options other than being beaten down at the negotiating table.

Canada exports many commodities and runs a current account deficit, so its economy could be hurt if the global flow of trade or capital slows. The best known Chapter 19 cases involving Canada have had to do with softwood lumber, and in the mid-2000s, the dispute resolution panels ruled repeatedly against the USA, strengthening Ottawa's negotiating position.

Trudeau on Wednesday insisted that Canada would work to maintain a dispute settlement process in the deal, provisions that the US prefers to ditch.

Canada had agreed to grant USA and other foreign dairy producers greater access to its market during negotiations over the ill-fated Trans-Pacific Partnership, which Trump withdrew the United States from during his first days in office.

Trudeau said Tuesday during a press conference to announce funding for transit in Surrey, B.C., that Canada would not sign onto a North American Free Trade Agreement that does not include a dispute resolution mechanism and exemptions for cultural industries.

Trump announced a new deal with Mexico on Monday, and on Friday formally notified Congress that he meant to execute a new agreement in 90 days after talks broke down with Canadian officials.

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