US and Canada to resume talks to salvage trilateral NAFTA deal

With a deal with Mexico out of the way, United States trade officials are due to resume talks with Canada yesterday to try to salvage the North American Free Trade Agreement as a trilateral accord.

After months of intense negotiations, the US and Mexico announced an agreement Monday on an overhaul of the 25-year-old free trade pact, but President Donald Trump hinted  he could cut Ottawa out.

Canadian Prime Minister Justin Trudeau stressed in a phone call with Trump that the aim is to reach a new NAFTA deal.

The leaders “had a constructive conversation” on NAFTA, and “look forward to having their teams engage this week with a view to a successful conclusion of negotiations,” Trudeau’s office said.

Canadian Foreign Minister Chrystia Freeland interrupted a trip to Europe to rush back to Washington to begin talks with US Trade Representative Robert Lighthizer. And Mexican President-elect Andres Manuel Lopez Obrador called for a three-way trade deal, saying “it’s important that Canada also be included.”

The outlines of a NAFTA 2.0 are now on paper, including provisions on auto trade, tougher worker protections and a provision to review the deal every six years.

“It’s a big day for trade. It’s a really good deal for both countries,” President Trump said in announcing the agreement from the Oval Office, with Mexico President Enrique Pena Nieto participating by telephone.

Negotiators have worked for a year to update and rewrite NAFTA, but in the last five weeks Washington and Mexico City worked to resolve their bilateral issues without Ottawa.

Trump indicated he would take a tough line with Canada on autos and dairy tariffs, long a source of tension between the neighboring countries.

Freeland’s spokesman Adam Austen said Canada “will only sign a new NAFTA that is good for Canada and good for the middle class. Canada’s signature is required.”

Mexican officials have insisted all along that the NAFTA must be a trilateral deal, but also acknowledged that either way it will have free trade commitments with both nations.

Lighthizer said the administration would notify Congress by Friday of the new agreement, which would allow the required 90 days’ notice to get the pact signed by December 1.

However, it was unclear whether the administration has the authority to substitute NAFTA with a two-nation trade agreement.

The Canadian team could be more amenable to the talks now that the US has backed away from a controversial and strenuously-opposed provision to require the three nations to renegotiate NAFTA after five years. Instead, senior US officials said the agreement had been extended for 16 years but would be reviewed every six years. If the parties agree to continue with no changes, it will be renewed for another 16 years.