Canada is signaling that this week's NAFTA deadline could comeand go without a deal—with Prime Minister Justin Trudeau citing a“range of paths” forward while his U.S. envoy digs in on twoissues.

Trudeau and David MacNaughton, the ambassador to Washington,each addressed the North American Free Trade Agreement (NAFTA) inseparate appearances on Wednesday, striking upbeat tones withoutgiving any indication of a frenzied push to reach an agreement. TheU.S. is planning to publish the text of its deal with Mexico onFriday, three people familiar with the matter said. Trudeau,however, downplayed the urgency of that deadline.

“We will keep working on a broad range of alternatives; a broadrange of paths are ahead of us,” Trudeau told reporters at theUnited Nations (UN) in New York. “We are very much looking in apositive and constructive way to getting to a renewed NAFTA thatwill be a trilateral agreement between Canada, Mexico, and theUnited States.”

His comments, along with those from Donald Trump's trade czarTuesday, suggest the U.S. will begin to finalize its pact withMexico, while somehow continuing talks with Canada—and holding openthe possibility of tucking the northern nation into the deal at alater date. The U.S. has said it will sign a deal with Mexico bythe end of November, with or without Canada.

The U.S. and Canada remain in “near-continuous negotiations,”Trudeau said, adding that his foreign minister—who is leading theNAFTA file—will address the UN on Saturday, signaling there won'tbe a last-minute bargaining push in Washington that day. “We willkeep working as long as it takes to get to the right deal forCanada,” he said.

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Trump Handshake

Trudeau also downplayed a brief handshake with Trump at aluncheon Tuesday, where the U.S. president remained seated despitestanding to greet other leaders. The prime minister said it was aquick and cordial encounter and that people shouldn't read too muchinto it.

MacNaughton, speaking Wednesday in Toronto, said Canada wants toreach a deal that Trump can hail as a victory but nevertheless hasred-line issues, including the need for dispute panels andprotection from tariffs.

“I don't like playing chicken with the future of the Canadianeconomy,” the ambassador said at an event hosted by Politico. “Onthe other hand, there are things where basically we are just notprepared to give into because it would really render the agreementmeaningless.”

On dispute resolution, the Trudeau government wants to keep someform of NAFTA's Chapter 19 panels, and the U.S. wants to eliminatethem. On tariffs, Canada wants protection from so-called Section232 national security measures the Trump administration has imposedon steel and aluminum imports from Canada and other countries. TheU.S. is also threatening similar tariffs on auto imports.

“If you can't resolve disputes in a fair and balanced way, thenwhat's the use of the agreement?” MacNaughton said. “If you can'thave some curb on the arbitrary use of tariffs under the guise ofnational security with a member of NORAD and somebody who is yourclosest defense partner, then I don't think it's much ofagreement.”

Auto tariffs in particular “would change the whole relationshipfor a long time to come,” he added. He said he didn't know when, orif, those might be imposed by the president.

Trudeau called the tariffs “unjust” and noted that Trump haspreviously said publicly that a NAFTA deal would mean there'd be noneed for 232 tariffs. Canada needs a NAFTA deal “thatinvolves obviously feeling confident about the path forward,” theprime minister said.

A day earlier, Lighthizer also cited Chapter 19 as a stickingpoint, while saying the subject of 232 tariffs would probably bedealt with later, rather than as part of an overall NAFTA deal asinitially sought. He also said dairy is a sticking point.

Canada is looking for a way to reach a deal that Trump can hailas a triumph, MacNaughton said. “Our desire is to try and find away in which we can get this agreement done where he can, in hisown way, declare victory—to have some kind of a win for what hesaid he wanted to achieve.”

Any final deal on NAFTA will include language around gender andindigenous rights, as initially sought by Canada, he said. NeitherLighthizer nor other U.S. negotiators ever cited that as a majorsticking point in talks, he said.

From: Bloomberg

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