Published: Mon, October 01, 2018
Money | By Ethel Goodwin

Three-way deal on NAFTA getting closer, but Canadian insiders remain cautious

Three-way deal on NAFTA getting closer, but Canadian insiders remain cautious

Canada and the U.S. have reached a last-minute free trade deal to revamp the long-standing NAFTA pact between the two countries and Mexico.

Canadian and USA negotiators were racing against a midnight Sunday deadline (0400 GMT Monday) to reach a deal to revamp NAFTA, but thorny issues including Canada's dairy market and US tariffs were still unresolved, a Canadian official and other sources said.

Negotiators for the U.S. and Canada were able to overcome major sticking points between the two countries, including Canada's protection of its dairy market and a system for settling trade disputes.

Dispute resolution: Chapter 19, an extrajudicial trade dispute system that allows NAFTA members to bring grievances against other members over allegedly unfair trade practices, will remain in place as it is under the current NAFTA.

Canada fought hard to retain Chapter 19, a holdover from NAFTA that USA trade ambassador Robert Lighthizer fought tooth and nail to eliminate.

US and Canadian negotiators have been working around the clock this weekend to make a Sunday midnight deadline that would allow the countries to sign the deal before Mexico's outgoing President Enrique Pena Nieto leaves office on November 30. Canada could be exempted from the auto tariffs if it agrees to limits on its auto exports to the United States, Ujczo said.

The Trump administration set Sunday as a deadline for Canada to strike a deal.

"Everybody's negotiating in good faith right now as we speak", Navarro said on Fox News just before 11 a.m.

Insiders got wind of a breakthrough after 14 months of tumultuous talks and just hours before US and Mexican trade authorities were set to publish their own trade agreement without Canada.

A series of calls the Prime Minister made to the chief executive officers of Canada's five largest banks leading into the weekend marked the culmination of months of back-channel communications between banks and government officials. One Ottawa source directly familiar with the talks said the two sides were very close, while another said: "We are close, but not there yet".

Beyond that, the renegotiation of NAFTA has been marred by a fake public consultation, the undue influence and involvement of corporate lobby groups, and a lack of transparency.

While the new deal - which includes revised provisions on the critical auto sector - should protect Mexico and Canada from Trump's threatened 25 percent tariffs on cars, still pending are the duties on steel and aluminum, which officials said was on a "separate track", handled by the Commerce Department.

Meantime, congratulations were being offered among key stakeholders who have been on the edge of their seats waiting to see if Canada and the United States would find common ground.

The Trump administration has been working to sign a new trade deal before Mexican President Enrique Peña Nieto leaves office on December 1.

In addition to opening the door for a NAFTA rewrite, the deal could also ease trade tensions between the U.S. and Canada over Trump's steel and aluminum tariffs.

U.S. -Canada talks bogged down earlier this month, and most trade analysts expected the September 30 deadline to come and go without Canada being reinstated.

Lawmakers from the three countries still need to approve the pact.

'Lots of progress, but we're not there yet, ' MacNaughton told reporters. The new deal likely won't be voted on by the U.S. Congress until 2019.

Reaching a deal would remove a key irritant in the trading relationship between the USA and Canada, its top export market.

Like this: