Trudeau Digs In on Core Issues as Nafta Talks Poised to Restart

(Bloomberg) -- Canadian Prime Minister Justin Trudeau said his government will hold steadfast on two key issues that have become sticking points in Nafta talks, saying he’d prefer to see the current pact killed than be forced to accept a bad deal.

Trudeau, speaking a day before U.S.-Canada talks were due to resume in Washington, repeated that he would only sign a deal that he thinks is good for his country -- in effect, pushing back against Donald Trump’s threats to freeze Canada out if an agreement can’t be reached.

Talks bogged down last week on a handful of issues, two of which Trudeau identified in a press conference Tuesday. One is anti-dumping panels contained in Chapter 19 of the North American Free Trade Agreement, and the other is a clause that exempts Canada’s cultural industries from Nafta. Trudeau said any new Nafta must keep some form of both.

“Canada will not be signing a deal unless it is in the interest of Canadian workers, the Canadian middle class and Canadians in general,” Trudeau said at a televised news conference near Vancouver. “We’ve been very clear that there are a number of things that we absolutely must see.”

The Chapter 19 panels were nearly a deal-breaker in original Canada-U.S. free trade talks a generation ago, and are a late sticking point again. The panels have worked “reasonably well” and are essential to ensuring fairness, Trudeau said.

“We need a dispute resolution mechanism like Chapter 19 and we will hold firm on that,” Trudeau said. “Not having a Chapter 19 to ensure the rules are followed would be bad for Canadians.”

The Canadian prime minister also said Nafta needs to maintain an exemption for cultural sectors, saying he doesn’t want to see Canadian TV networks swallowed up by American giants. “The cultural exemption must stand as part of any renegotiation of Nafta,” Trudeau said. “It would be a giving up of our sovereignty and our identity, and that is something we simply will not accept.”

The U.S. and Mexico reached a preliminary deal last month on how to renew Nafta, and Canada rejoined talks last week. The remaining issues are almost entirely between the U.S. and Canada, and Trump has threatened to move ahead without Canada if a deal can’t be reached. However, key figures like U.S. lawmakers and major labor leaders are insisting Trump include Canada.

The Trump administration sent notice to Congress on Friday of intent to sign a new deal with Mexico and possibly Canada. They would need to release text of that deal by the end of this month. The countries are hoping to sign something before Mexico’s incoming president takes office Dec. 1.

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