A worker welds an aluminum fitting at the Parr Metal Fabricators Ltd. facility in Winnipeg, Canada. (Photographer: Shannon VanRaes/Bloomberg)

U.S. and Canada Race Toward Nafta Deal

(Bloomberg) -- The U.S. and Canada are engaged in last-minute negotiations to update Nafta by Sunday’s deadline, though sticking points remain that could leave Ottawa out of the trade bloc.

U.S. and Canada Race Toward Nafta Deal

Talks continued Sunday morning amid renewed urgency to nail down the text of a new agreement by midnight, White House trade adviser Peter Navarro said. The U.S. and Mexico made an agreement in August, putting pressure on Canada to reach a deal as well.

“Everybody’s negotiating in good faith right now as we speak,” Navarro said on Fox News just before 11 a.m. New York time. “It’s either going to be the text goes in with Mexico and the U.S., or the text goes in with all three countries.”
The U.S. and Mexico held off on a plan to publish the full text of their deal on Friday as American and Canadian negotiators rushed to narrow differences.

“There are several sticking points,” Navarro said, adding that he’d recently spoken to the negotiating team that’s led by U.S. Trade Representative Robert Lighthizer.

Chrystia Freeland, Canada’s foreign affairs minister and chief Nafta negotiator, postponed a planned speech at the United Nations on Saturday, a signal of the Nafta push. She was in Ottawa on Sunday morning.

The U.S. and Canada are on the verge of a deal after making progress on contentious issues, people familiar with the talks said, speaking on condition of anonymity as negotiations continue. At this stage no issue seems too large to overcome, they said.

U.S. and Canada Race Toward Nafta Deal

Requests for comment Saturday from Lighthizer’s office and the Canadian government weren’t returned.

Reaching a deal would remove a key irritant in the trading relationship between the U.S. and Canada, its top export market. President Donald Trump has threatened auto tariffs in the event a deal can’t be reached.

60 Days

Under U.S. trade law, an agreement must be published for 60 days before it can be signed by leaders of any of the participant countries, putting negotiators on the clock to reach a deal that can be signed by Nov. 30.

A delay would mean current Mexican President Enrique Pena Nieto wouldn’t be able to sign the deal before he leaves office, placing the fate of the pact in the hands of his successor, Andres Manuel Lopez Obrador. Lopez Obrador takes over on Dec. 1.

The U.S. and Canada have been hung up on some core issues. They include:

  • So-called Chapter 19 dispute panels, which the U.S. wants to eliminate from Nafta and which Canada wants to preserve
  • An exemption for cultural sectors which Canada wants to preserve
  • The use of Section 232 investigations to apply tariffs to steel, aluminum, and potentially cars. Canada is seeking some kind of exemption or protection from those
  • Canada’s dairy sector, which the U.S. wants greater tariff-free access to
  • Intellectual property and certain pharmaceutical patents, each of which the U.S. wants to extend

Auto tariffs would substantially hurt Canada, a major auto exporter. However, they would also upend North American supply chains and complicate life for U.S. companies.

Marc Garneau, a Canadian cabinet minister who heads Prime Minister Justin Trudeau’s U.S.-relations committee, said in a television interview aired Sunday that Canada continues to press for some kind of protection against auto tariffs.

“We’re not working towards a deadline. We’re working towards a deal that is good for Canada,” he told Global TV’s “The West Block.”

Key U.S. lawmakers have called for the three-nation format to continue, meaning Congress may delay a new agreement that doesn’t include its northern neighbor.

If a Nafta deal is reached, the U.S. government would see little reason to impose auto tariffs on Canada, though it was unclear whether there would be any hard exemption granted, some of the people said.

Meanwhile, the existing Nafta remains in effect, and any country can quit on six months’ notice; no country has given such notice.

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