Time Running out for U.S.- Canada Trade Agreement
Only a week of significant negotiating time remains for the United States and Canada to conclude on the fate of the North American Free Trade Agreement (NAFTA). If a solution is not found by the end of the week, it will likely be too late for Canada to meet the U.S. demand for a completely drafted deal by October 1st.
The United States has put a time limit for Canada on NAFTA because it seeks to sign the multinational agreement before the newly elected Mexican President, Andrés Manuel López Obrador, comes into office. This rush is due to a fear by the Trump administration that the incoming Mexican government will seek more concessions from the U.S. than the outgoing one.
Despite the time constraints, the United States and Canada have fundamental disagreements on the future of NAFTA. Canada’s heavily protected dairy markets are currently one of the central impasses at coming to an agreement, with the U.S. demanding more access for American products. Another point of contention is the existence of dispute panels, which allow each country to block imports that they believe are anti-fair trade until heard before a panel of experts. Canada refuses to go ahead without this provision while the United States seeks to remove it altogether.
However, both nations are actively working to cement the trade agreement in time. Canadian Foreign Minister, Chrystia Freeland, traveled to Washington this week and has been in high level meetings with the U.S. Trade Representative, Robert Lighthizer, which was their fourth set of talks in four weeks on the issue.
Freeland spoke to reporters on Wednesday and told them that talks had been, “constructive” and that, “We are a country that is good at finding compromises and that’s a talent our negotiators certainly demonstrate. At the same time, our core objective ... is to defend the national interest,
Numerous business and trade groups within the United States have offered up support for keeping Canada in the NAFTA agreements. A joint letter on Monday was sent to Lighthizer by the U.S. Chamber of Commerce, the Business Roundtable and the National Association of Manufacturers. These three business entities declared that “it would be unacceptable to sideline Canada” in the new version of the NAFTA treaty.
Despite the pressure from American business groups and the Canadian Government, high-level Republicans and members of the Trump administration who espouse the President’s protectionist views seemed to float the idea of leaving Canada out of the agreement. Representative Steve Scalise (R-LA) the current House majority whip, blamed Canada for the lack of a deal. In a statement released on Tuesday, he claimed that, “there is a growing frustration with many in Congress regarding Canada's negotiating tactics” and threatened, “if Canada does not cooperate in the negotiations, Congress will have no choice but to consider options about how best to move forward and stand up for American workers.”
If an agreement is not made between the two Countries, consequences could be dire. President Trump has threatened to impose high tariffs on automobiles if the Trudeau government does not sign into the deal. However, a two-nation NAFTA agreement would not be popular on both sides of the Senate, and it could end up being voted down. If this occurs, the result would be a crippling blow to the White House.
Canadian Prime Minister Justin Trudeau offered a brighter outlook on the negotiations in a speech earlier in the season, “we know that it is very possible to get a deal that works in everyone’s interest” and that he was, “looking forward to signing the right deal for Canada.”