Canadian government and industry sources remain skeptical that the finish line on a NAFTA deal is anywhere in sight, despite reports from Washington that the Trump administration is hoping for a kind of deal-in-principle when the leaders from the three NAFTA countries meet in Lima, Peru next week.
Bloomberg reported Monday that the White House is keen to have U.S. President Donald Trump stand with Prime Minister Justin Trudeau and Mexican President Enrique Pena Nieto at the Summit of the Americas in Lima next week and announce that the three countries have agreed on the broad outlines of an updated North American Free Trade Deal. The idea, Bloomberg said, would be to have technical details sorted out in the months ahead.
Adam Austen, a spokesman for Foreign Affairs Minister Chrystia Freeland, would not comment on reports from Washington about a potential deal-in-principle other than to say, “Canada is committed to concluding a modern, mutually beneficial NAFTA as soon as possible.”
Freeland is expected to travel to Washington at the end of this week for one-on-one meetings with U.S. Trade Representative Robert Lighthizer.
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Canadian auto industry sources are confident that the three countries are close to an agreement on the rules of origin for autos and automotive component.
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“Right now where we are? I’m very positive,” said Flavio Volpe, president of the Automotive Parts Manufacturing Association of Canada.
But other non-auto industry sources tell Global News that the gap has grown between the three countries in other areas. And while it’s possible Trump, Trudeau, and Nieto could announce an agreement on autos, it may not be in Canada’s best interest to have leaders announce sectoral agreements.
For Canada, the goal is an improved NAFTA, not simply to improve the deal for certain sectors, according to some sources who have been briefed by Canada’s negotiating team.
Trump, meanwhile, appeared to relish the idea of continuing to use the threat of walking away from NAFTA to accomplish his objectives in other policy areas, notably on the security of America’s southern border.
Speaking from the White House on Tuesday, Trump called NAFTA “a cash cow” and made some vague complaints that Mexico was not doing enough to prevent illegal migration from Mexico into the United States.
“We will be doing things with Mexico and they’re going to have to do it. Otherwise, I’m not going to do the NAFTA deal,” Trump said. “NAFTA’s been fantastic for Mexico and bad for us.”
Trump only briefly mentioned Canada in an extended six-minute monologue in which he mixed complaints about NAFTA with complaints about immigration control.
“We’re renegotiating the deal right now, but it’ll still be good for Mexico and Canada,” Trump said.
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For Canada, the crucial outstanding issues include a dispute resolution mechanism and a sunset clause. Both issues were put on the table by the Trump administration.
Trump wishes to end the independent dispute resolution mechanism. He also wants a sunset provision in which NAFTA would automatically die if the deal was not reaffirmed by each country from time to time. Both ideas are non-starters for Canada.
There are also disagreements in agriculture — mostly over Canada’s supply management system in dairy and poultry — and government procurement, but those sorts of disagreements were common to other U.S. administrations.
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