Deal between US, Canada on NAFTA 2.0 soon possible

A deal on an overhaul of the North American Free Trade Agreement appeared within reach as Canada and the United States opened their third day of negotiations Thursday aimed at getting the pact done by the end of the week.

Trade officials worked late into the night on details, and Canada's Foreign Minister Chrystia Freeland said, "There's a lot of goodwill on both sides."

Following another face-to-face meeting with US Trade Representative Robert Lighthizer, Freeland said she remains "optimistic" the sides can bridge their differences by Friday.

She said the discussions have been "very, very intensive."

Donald Trump has threatened to leave Canada on the sidelines since announcing a breakthrough with Mexico on Monday, but both the US president and Canadian Prime Minister Justin Trudeau have also expressed optimism a deal is close.

The White House plans to notify Congress on Friday of its intention to enter into a new free trade agreement, to provide the required 90 days' notice that would allow NAFTA 2.0 to be signed by December 1, when Mexico will install a new president.

But that will mean compromises on both sides on issues that have created friction between the neighboring countries, notably Canada's dairy trade rules and mechanisms to settle disputes and intellectual property protections, as the leaders each try to claim victory.

"I think they're going really well," Trump said of the Canada talks, saying they were "probably on track" to meet the Friday deadline.

"I think Canada very much wants to make the deal," he said, while again raising the possibility of a separate, bilateral deal with Mexico.

The crucial phase of talks began Tuesday, and Trudeau also expressed optimism about chances of an agreement by the end of the week.

"There is a possibility of getting to a good deal for Canada by Friday," Trudeau said. But "no NAFTA deal is better than a bad NAFTA deal."

Freeland has declined to comment on the specific issues being discussed, saying the sides had agreed "we are not going to conduct our negotiation in public."

'High-level' agreement

If the White House notifies Congress by Friday, it then would have until September 30 to submit the final NAFTA agreement. But even if the pact is signed by December 1, Congress would have time to debate before voting on it.

The sticking points between Ottawa and Washington likely will center on Canada's managed dairy market and how to handle some disputes among NAFTA partners, as well as patent protections for medicines.

Negotiators have worked for a year to update and rewrite the 25-year-old free trade pact. But in the last five weeks, Mexico City and Washington held talks to resolve their bilateral issues, especially on the auto industry rules, without Ottawa.

While critics said Canada had been frozen out, Freeland has repeatedly stressed that she remained in close touch with her Mexican and US counterparts throughout the summer and had already achieved "a high-level agreement with the US" on some of the pending issues on autos and labor rights.

She also has met this week with her Mexican counterparts, who remained in Washington after announcing the breakthrough deal with the United States.

Mexico's Economy Minister Ildefonso Guajardo said he expected to rejoin his US and Canadian counterparts for trilateral talks later Thursday of Friday.

However, a Canadian official told AFP the focus at the moment remains on the bilateral discussions with Washington.

Freeland praised Mexico's willingness to make difficult concessions on auto trade and labor issues, which helped pave the way for a three-party agreement.

The "significant compromises that Mexico was prepared to make to support Canadian workers... set the stage for very intensive conversations" to conclude NAFTA, she said.

The new NAFTA includes a higher percentage of locally-produced components in autos, a requirement that a percentage of vehicles must come from high wage factories, tougher worker protections and a provision to review the 16-year deal every six years.

Guajardo said if Ottawa and Washington fail to come to agreement, Mexico would have to return to the negotiating table to revisit some of the auto industry rules. However, he said it would not be a "pitched battle.

Trudeau has vowed not to give in to Washington's demands to alter the system under which Ottawa sets dairy production quotas and prices, with steep tariffs on imports.

But Ottawa could offer US dairy farmers a small increase in market share as it did with the EU in a free trade pact last year, in exchange for US concessions on the NAFTA chapter on dispute resolution.