Nafta deal: Canada and US race to settle differences as deadline looms



With little time left ahead of a deadline to agree to a renewed Nafta trade deal, Canadian and US officials on Sunday tried to settle differences on tough issues such as protection against US tariffs.

The Trump administration said Canada must sign onto the text of the updated North American Free Trade Agreement by midnight ET on Sunday or face exclusion from the pact, which includes Mexico.

Donald Trump blames Nafta for the loss of US manufacturing jobs and wants major changes to the pact, which underpins $1.2tn in annual trade. Markets fear its demise would cause major economic disruption.

Two Ottawa sources directly familiar with the talks said a deal could be very close but stressed some challenging matters had yet to be solved. One of the sources said Canada would take nothing for granted until Trump had signed off on the deal.

US trade representative Robert Lighthizer and White House adviser Jared Kushner planned to brief Trump on Sunday on the talks, said a US source familiar with the discussions. Lighthizer and Kushner have been keeping Trump updated through the weekend, added the source, who was not authorized to speak about the talks publicly.

White House trade adviser Peter Navarro said everyone involved was working in good faith and reiterated the Sunday deadline.

“It’s either going to be the text goes in with Mexico and the US or the text goes in with all three countries,” he told Fox News.

US business groups oppose turning Nafta into a bilateral deal because the three nations’ economies have become closely intertwined since the pact came into force in 1994.

Officials have blown through several deadlines since August 2017 and a third Canadian source said that if the two sides were close enough at midnight, negotiations could spill into Monday.

Negotiators – still apart on matters such as dispute resolution and a US demand for more access to Canada’s dairy markets – are also tackling the matter of US tariffs.

Trump has imposed tariffs on Canadian aluminum and steel, citing national security, and is threatening similar punitive measures against auto exports. Canadian prime minister Justin Trudeau said it makes no sense to sign onto a new Nafta only to be hit by new tariffs.

“It’s a challenging task to figure that out and they’re spending a lot of time on that right now,” said the third Canadian source.

One solution might be to imitate the provisions of the bilateral Mexico-US deal on Nafta. The two nations signed a side letter allowing Washington to pursue tariffs on annual Mexican car and SUV imports of over 2.4m vehicles, a number that significantly exceeds last year’s total. The Mexican government said the letter provided insurance that gave the auto industry scope to grow.

A fourth Canadian source directly familiar with the negotiations said any suggestion Ottawa would accept a cap or quota on autos exports was completely inaccurate.

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