U.S. and Canadian negotiators could wrap up a Nafta deal as soon as Saturday in their bid to avoid a fight that imperils $500 billion in annual trade, said people familiar with the talks said.
There’s renewed urgency to nail down a new North American Free Trade Agreement that could be published Sunday, so it can be signed by Mexican President Enrique Pena Nieto before he leaves office. The U.S. and Mexico reached their own agreement in August, triggering talks between the U.S. and Canada.
The U.S. and Mexico held off on a plan to publish the full legal text of their deal on Friday as the U.S. and Canadian negotiators raced against a Sept. 30 deadline.
Chrystia Freeland, Canada’s foreign affairs minister and chief Nafta negotiator, postponed a planned speech at the United Nations on Saturday, spokesman Adam Austen said by email, a signal of the Nafta push. It’s not known if she’ll instead travel to Washington for talks.
The U.S. and Canada are on the brink of a deal after making progress on contentious issues, the people said, speaking on condition of anonymity as negotiations continue. While there’s no guarantee that a final agreement will be reached, no issue at this point is too large to overcome, they said. Talks have been active over the past few days, including during the U.N. General Assembly in New York.
“At this moment there’s a very serious attempt to continue advancing in the process of finalizing the differences in bilateral issues between the U.S. and Canada,” Mexican Economy Minister Ildefonso Guajardo said late Friday.
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, Pena Nieto’s final day in office.
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 autos. 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 extendAuto tariffs would substantially impact Canada, a major auto exporter. However, it would also upend North American supply chains and complicate life for U.S. automakers. President Donald Trump said on Sept. 26 that he refused a meeting with Canadian Prime Minister Justin Trudeau while at the United Nations amid the trade impasse, and threatened auto tariffs, calling them the “mother lode.”
If the U.S. and Mexico try to advance a bilateral deal without Canada they may face delays in Congress, where key lawmakers have called for the three-nation format to continue. Meanwhile, the existing Nafta remains in effect, and any country can quit on six months’ notice; no country has given such notice.
Failure to reach a deal raises the prospect of what some call a zombie Nafta — a bilateral deal advancing to update a trilateral pact, even while the old agreement remains in place.
A former senior Canadian trade adviser warned that the auto tariff threat outweighs anything else.
“The threats to Canada are much bigger than a potential zombie Nafta; the threats come in the form of auto tariffs that would be very devastating to our economy,” said Meredith Lilly, trade adviser to Canada’s former prime minister, Stephen Harper, and now Simon Reisman Chair in International Affairs at Carleton University in Ottawa. “The risk of auto tariffs shouldn’t be underestimated.”