Trump, Trudeau raise NAFTA brinkmanship, muse about walking away from deal

by Ben Pena September 8, 2018, 2:10
Trump, Trudeau raise NAFTA brinkmanship, muse about walking away from deal

Foreign Affairs Minister Chrystia Freeland is to resume talks with US trade czar Robert Lighthizer, whom she has praised as a "good faith" negotiator in the face of President Donald Trump's Twitter barrages.

The Bank of Canada isn't expected to increase interest rates on Wednesday but markets will be watching for any word coming out of the resumption of NAFTA talks between Canada and the United States, said Jerusalim.

"We sent them (the officials) a number of issues to work on and they will report back to us in the morning, and we will then continue our negotiations", Freeland told reporters on leaving the US Trade Representative's office in Washington on Wednesday.

Canada and the U.S. need to present a text to the U.S. Congress by October 1 in order to join the deal the Trump administration signed with Mexico last week.

Prime Minister Justin Trudeau says the USA president's aversion to following rules is a key reason Canada can't budge on a dispute settlement provision in a revamped North American Free Trade Agreement.

Prime Minister Justin Trudeau pushed the issue into the NAFTA spotlight this week by suggesting American negotiators wanted Canada to put the cultural exclusion on the bargaining table.

Though the USA president often threatens to withdraw from Nafta, the latest pledges are piling up pressure on negotiators who are trying to wrap up more than a year's worth of talks and strike a deal that could be signed before 1 December. The legislators urged top U.S. negotiator Robert Lighthizer to make sure a new NAFTA deal would address Canada's protectionist dairy policies in a letter sent in April.

"If we don't make a fair deal for the USA after decades of abuse, Canada will be out, " he wrote.

"I love Canada", he said.

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"It would have been hard to justify a rate hike even if the economy warranted it today given the overhang of NAFTA uncertainty", said Royce Mendes, senior economist at CIBC Capital Markets. "I think the relationship between Canada and the United States is so close and deep", he says, "that it will take more than one president to destroy it". "Trump may have been aiming to get NAFTA over the line ahead of the midterms but I think he's in this one for the long-run and the Chinese don't appear to be in any mood to back down, even if they aren't able to respond with the same volume of tariffs". Negotiators failed to strike a deal last week.

Chapter 19 allows NAFTA partners to evaluate the fairness of extra taxes placed on products (known as as anti-dumping or countervailing duties) by domestic agencies including such things as the U.S. Department of Commerce, the International Trade Commission (ITC), the Canadian Border Services Agency and the Canadian International Trade Tribunal.

"We will not sign a deal that is bad for Canadians, and quiet frankly, not having a Chapter 19 to ensure the rules are followed would be bad for Canadians", he said.

The grueling talks are aimed at getting to join a tentative U.S. -Mexico agreement to replace the 24-year-old NAFTA.

"Our dairy farmers are facing dire economic conditions this year, and the Canadian pricing scheme and tariffs are curtailing much-needed markets for USA dairy products", said Jim Mulhern, president and CEO of the National Milk Producers Federation, earlier this year.

Wednesday was the first day that talks between the two countries resumed after four intensive days of talks last week ended on Friday without a deal after the mood soured. But it makes up a small amount of all the goods traded between the two countries.

Canada had agreed to grant US and other foreign dairy producers greater access to its market during negotiations over the ill-fated Trans-Pacific Partnership, which Trump withdrew the United States from during his first days in office.

Freeland stuck to her mantra of not wanting to negotiate in public - an agreement struck with the tough-talking Lighthizer as an act of good faith.

While consumer spending remains strong, corporations are waiting for a decision on NAFTA before making spending decisions, Small added.

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