Canada trade talks fizzle, Trump moves on Mexico-only deal

Canada trade talks fizzle, Trump moves on Mexico-only deal

31/08/18 - 17:06 - The Trump administration and Canada failed to come to an agreement on the president's bilateral trade deal with Mexico Friday, prompting the White House to say it would submit the deal to Congress anyway.

"Today the president notified the Congress of his intent to sign a trade agreement with Mexico -- and Canada, if it is willing -- 90 days from now," U.S. Trade Representative Robert Lighthizer said. He added that talks with Canada would resume next week.

Friday was considered a deadline for the deal because under Trade Promotion Authority, the law covering submitting trade deals to Congress, Trump must give lawmakers 90 days notice. Friday, August 31 is 90 days before incoming President Andres Manuel Lopez Obrador, a NAFTA critic, officially takes office, so a deal submitted by then would be under Mexico’s current president, Enrique Pena Nieto.

That sets up a potential showdown between the White House and lawmakers, many of whom have expressed skepticism of proceeding on a deal without Canada's approval because that would damage the North American Free Trade Agreement. Another potential sticking point is that the administration's original notice to Congress that it was entering talks said it was going to renegotiate NAFTA. Some lawmakers argue that that means anything submitted to Congress must involve all three NAFTA countries.

Trump is wagering that not enough lawmakers will want to take Canada's side in the fight. "We sent (Congress) a letter today saying that we intend to enter an agreement with Mexico and Canada, if Canada is willing to participate in that agreement," a senior administration official, speaking anonymously, told reporters. The official argued that they had been "very transparent, very clear" but conceded, "Obviously, the Senate will make its own decisions."

U.S. and Canadian officials had met throughout the week and on Wednesday seemed confident that they could reach an agreement on the U.S.-Mexican deal by Friday. The administration has contended that Canada's consent was not necessary but sought the approval to prevent the deal from becoming too controversial.

A key sticking point for Canada was a section in the deal that scrapped NAFTA’s Chapter 19, which involves settling disputes over levies and anti-dumping rules. Chapter 19 cases are heard by an independent, binational panel of five arbitrators and are not appealable by courts in either country. The Trump administration has sought to get rid of the section, regarding it as infringing on U.S. sovereignty. Preserving it has been a goal of Canada's, since the section is seen as key to protecting many of its domestic industries such as timber, which benefit from generous government support. It was Canada that insisted the section be included when NAFTA it was first written in 1993.

Probably not helping the situation was a report Friday by the Toronto Star that President Trump told Bloomberg reporters in off-the-record comments that any deal with Canada would be “totally on our terms” because he was using tariffs to keep them from asking for more. “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,” Trump said, according to what the Star said was an anonymous source. The Impala is produced at a General Motors plant in Ontario.

The main parts of the U.S.-Mexican deal altered the so-called "rules of origin" for cars and trucks, raising up to 75 percent, up from 62.5 percent, the amount of North American-made parts needed for them to be duty-free under NAFTA. It also required that at least 40 percent of all auto content be made by workers earning at least $16 an hour or its equivalent. Both changes would force auto manufacturers to move more production back into the U.S.