Canada and the United States failed to meet a Friday deadline to conclude a deal to rewrite the North American free-trade agreement, but talks will resume next week despite inflammatory comments from President Donald Trump that ruled out any concessions to Canada.
Canadian officials insisted the failure to bridge the trade differences did not mean Canada would be left on the sidelines, even as Mr. Trump gave formal 90-day notice to Congress that he intended to pursue a U.S.-Mexico bilateral accord.
U.S. Trade Representative Robert Lighthizer said in a statement that Canada would join in a negotiated NAFTA “if it is willing.”
Foreign Affairs Minister Chrystia Freeland said she remains optimistic that a final deal can be hammered out to include Canada but she would not be pinned down on a deadline.
“For Canada, the focus is on getting a good deal and once we have a good deal for Canada, we will be done,” Ms. Freeland told a news conference on Friday in Washington.
After more than a year of contentious talks with an excess of $1-trillion in annual trade hanging in the balance, Canada and its largest trading partner are down to a handful of sticking points holding up Mr. Trump’s goal of overhauling NAFTA.
Negotiations have been at an impasse all week over the Trump administration’s refusal to concede on Canada’s red-line demand to keep a key dispute-settlement mechanism.
Despite Mr. Lighthizer’s attempt to put pressure on Canada to give in by marking Friday as a deadline – the latest of several end-dates the United States has set for the talks – Canada refused to give in. And ultimately the United States agreed to keep negotiating, with talks resuming on Wednesday in Washington.
The trade talks with Canada were thrown into disarray Friday morning after the Toronto Star reported that Mr. Trump had told Bloomberg in an off-the-record discussion that he didn’t plan to compromise with Canada at all on NAFTA.
"Again off the record, they came knocking on our doors last night. ‘Let’s make a deal. Please,’ ” Mr. Trump was quoted as saying. “Off the record, Canada’s working their ass off. And every time we have a problem with a point, I just put up a picture of a Chevrolet Impala [which is produced at a General Motors plant in Oshawa].”
Mr. Trump later confirmed in a tweet that his statements were accurate even as he deplored the leak of the off-the-record remarks. “At least Canada knows where I stand!” he tweeted as he travelled to a rally in North Carolina.
At the rally, Mr. Trump went further, saying Canada had “been taking advantage of our country for many years” and once again threatened to impose 25-per-cent tariffs on Canadian auto exports to the U.S. market.
Ms. Freeland would not be drawn into criticism of Mr. Trump and what effect his no-compromise comments had on the already intense bilateral negotiations.
When asked how Canada could possibly negotiate with Mr. Trump when he won’t give any ground, Ms. Freeland said she put her trust in the integrity of Mr. Lighthizer.
“My negotiating counterpart is Ambassador Lighthizer and he has brought good faith and goodwill to the table,” she said. “It is going to take flexibility on all sides to get to a deal in the end and … we are confident that win, win, win deal is possible.”
As the President notified Congress of his intent to sign a trade agreement with Mexico, Canadian officials told The Globe and Mail the President would have to abrogate NAFTA to win congressional approval for a bilateral deal between Mexico and the United States.
Officials say that is highly unlikely as U.S. senators have been strong supporters of Canada and could trigger an internecine fight within the Republican Party and a revolt from the U.S. business community.
“Anything other than a trilateral agreement won’t win congressional approval and would lose business support,” Thomas Donohue, president of the U.S. Chamber of Commerce, warned in a statement Friday.
In a background briefing, a senior administration official said it would be up to Congress to decide whether it would take up a Mexico-only pact. The official declined to put a new deadline on talks with Canada. A text of the deal must be submitted to Congress in 30 days, with a signing by the countries 60 days after that.
“I cannot support a trade agreement to replace NAFTA that does not include Canada, Vermont’s biggest trade partner. Our economies are intertwined in Vermont and across the U.S. There would be grave concerns on both sides of the aisle about proceeding with an incomplete agreement,” Patrick Leahy, a Democratic senator from Vermont, tweeted Friday afternoon.
Attempting to tear up the existing NAFTA could also trigger a legal battle and standoff with Congress, as legal opinions are split on whether the President has the unilateral power to do this.
“Trump can’t sign any bilateral deal with Mexico, as he threatens, as long as NAFTA continues in force. He has no authority to conclude any such agreement and ending NAFTA requires Congress to agree and pass a bill to do that,” said Lawrence Herman, a veteran Canadian trade lawyer.
Jesus Seade, the representative of Mexican president-elect Andres Manuel Lopez Obrador in the talks, said Mexico wants Canada in the deal but is still ready to proceed without it. “Whether we will have Canada, is beyond our control ... We’ll be sorry to lose Canada,” he said in an interview.
Officials say week-long negotiations in Washington have become bogged down on independent trade dispute panels, cultural exemptions and Canadian dairy tariffs − and so far there is no indication that the United States is willing to grant Canada’s key demand to maintain the Chapter 19 trade dispute resolution mechanism, which allows trade disputes to be brought before binational trade panels rather than having to rely on the U.S. court system.
Canada offered concessions on intellectual property and greater U.S. access to the Canadian market on dairy. Talks have also run into difficulty as the United States put pressure on Canada to weaken protection for Canadian cultural industries that are now exempted under the current NAFTA deal.
With a report from Stephanie Nolen in Mexico City