NAFTA talks: Canada voices optimism as it rejoins negotiations

Canadian officials appeared optimistic Wednesday that a deal to rewrite NAFTA is within reach.Prime M...

Posted: Aug 30, 2018 9:49 AM
Updated: Aug 30, 2018 9:49 AM

Canadian officials appeared optimistic Wednesday that a deal to rewrite NAFTA is within reach.

Prime Minister Justin Trudeau said that the United States, Mexico and Canada may be able to come to an agreement by Friday.

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"We recognize that there is a possibility of getting there by Friday, but it is only a possibility, because it will hinge on whether or not there is ultimately a good deal for Canada" he said at a press conference in Ontario. "No NAFTA deal is better than a bad NAFTA deal."

It's quite a change from Monday when President Donald Trump announced from the Oval Office that the United States had reached a preliminary deal with Mexico, and that he might simply leave Canada out.

Canada had been sidelined for months as officials from the other two countries addressed issues over auto manufacturing. But Canadian Foreign Minister Chrystia Freeland cut a trip to Europe short so that she could rejoin the talks in Washington Wednesday.

Existing Canadian trade policies that protect its farmers could be a big sticking point. The Trump administration wants those to change.

"You go to Wisconsin, you go to Iowa, you go to upstate New York and different places where you have very big farm communities. They've been treated very, I would say, in a rough manner by Canada. So, hopefully that will end," Trump said in an interview that aired Tuesday on RFD-TV.

Some American dairy farmers have complained about Canada's steep tariff on dairy products, which averages 249%.

The American Farm Bureau has lobbied for a rewrite of NAFTA to eliminate or reduce Canadian tariffs on dairy, poultry eggs and wine, as well as recently implemented barriers to imports of ultra-filtered milk.

"It's clear the Trump Administration wants open market access for dairy products. It's a must-have," said Welles Orr, a senior international trade adviser at Miller and Chevalier, and a former Assistant U.S. Trade Representative.

But many countries have trade policies in place to protect their own agricultural industries. Canada officials are likely to argue that the United States has high tariffs on some products, too, said John Horn, professor of practice in economics at Washington University in St. Louis.

Canada is United States' second largest trading partner after China. Last year, $341 billion of American goods and services were sold in Canada. About $332 billion of Canadian goods and services were exported to the United States. Dairy only makes up a small amount of the trade.

Experts don't expect that the changes proposed in the preliminary deal between Mexico and the United States to upset Canada.

It would require more car parts to be made in North America, and to be made by workers earning at least $16 an hour. That could move some manufacturing from Mexico to Canada, Horn said.

"The deal doesn't read like it would be a massive disruption to existing trade. A lot of this is politics," Horn said.

The upcoming mid-term elections may put pressure on President Trump to ink a deal as soon as possible. Plus, Mexico's president-elect, who has criticized Trump, takes office on December 1.

The Trump administration must officially notify Congress about the deal, and it has 90 days to review it. Then, Congress must wait for an economic analysis from the US International Trade Commission before it can vote to officially make the deal law.

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