Canada's Trudeau faces hard choices at NAFTA talks

Ivan Schwartz
September 7, 2018

Trump's frustration spilled into the open over the holiday weekend as he railed against Canada on Twitter - as well as its many supporters in both political parties.

US and Canadian negotiators started a second day of talks aimed at rescuing the North American Free Trade Agreement on Thursday as the deadline for a deal this week, set out by President Donald Trump, inched ever closer. "So ensuring that we continue to control our news, our broadcasts, our airwaves and our media is really - keeping it in Canada and independent - is something that's really important to us". "Canada's the main trading partner for many states, quite a bit of our economic fortunes are entwined with Canada".

Trump, according to the Star report, said he frequently reminds Canada that if necessary he will slap painful tariffs on auto imports. In bilateral talks with the U.S., Canadian negotiators can perhaps keep a ghost of the original dispute resolution process "on the books" to avoid a complete surrender. China has already said it will retaliate. It was obvious that for Trump anything that replaced NAFTA had to reflect US primacy in North America even more than the already lopsided deal, whereby the USA got privileged access to Mexican and Canadian energy resources, and a bill of rights for its giant corporations. "You can't fix NAFTA without fixing issues with Canada", said Senator Ron Wyden, the top Democrat on the Senate Finance Committee, which oversees trade.

Richard Trumka, the president of the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO, ) said Sunday that Canada needs to be on board, alongside the US and Mexico, due to existing economic integration across the continent. "The president can not pull America out of NAFTA without Congress' permission", Wyden said in a statement.

At 3:12 p.m. (1912 GMT), the Canadian dollar was trading 0.3 per cent higher at $1.3139 to the greenback, or 76.11 US cents.

Congress must approve any rewrite of the deal and could refuse to endorse an agreement that excludes Canada. The White House on Friday gave Congress the required 90-day notification that it would be signing a revised version of the quarter-century-old NAFTA with Mexico and would include Canada "if it is willing".

The president told Congress he wants to sign a new NAFTA- even if it's only with Mexico- before the end of the year.

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Aides to the US and Canadian sides worked late into the night after the talks started in Washington on Wednesday, suggesting that areas for potential progress in the talks had been identified. But Canada's dairy industry - backed by Quebec politicians of all stripes - is adamant that it won't stand for the government allowing the USA any more market access, saying it has compromised enough on past trade deals with the European Union and Pacific Rim countries. The US Dollar lacked any firm directional bias and was seen consolidating in a range around the key 95.00 psychological mark.

The prime minister staked out Canada's ground as a fresh October 1 deadline and the encroaching American midterm elections cast a shadow over Wednesday's resumption of negotiations in Washington.

Canada's cultural exemption was absent from the Trump administration's list of negotiating objectives released before the start of the talks.

U.S. Trade czar Robert Lighthizer has argued there's a legitimate case for some cultural exceptions, but that "the cultural exemption is very often just cultural protectionism". Congress has the authority to approve trade deals.

But other issues have yet to be worked out, including Canada's cultural exemption in NAFTA.

The Trump vitriol aimed at Canada over the weekend also put pressure on Trudeau not to bend to USA demands even if economists warn a collapse of NAFTA could be very damaging to the Canadian economy.

Other reports by GizPress

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