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OTTAWA (Reuters) – Canada and the United States on Saturday cut their differences in last-minute talks to save NAFTA, but there is no guarantee that an agreement will be reached, two sources in Ottawa said.
PHOTO: The flags of Canada, Mexico and the United States are visible on a lectern before a joint press conference following the seventh round of NAFTA talks in Mexico City, March 5, 2018. REUTERS / Edgard Garrido / File Photo
Both countries are trying to find a way to update the North American Free Trade Agreement and prevent it from shattering. The 1994 pact underlies the $ 1.2 trillion annual trade and its demise would be extremely damaging, economists say.
The administration of President of the United States, Donald Trump, threatens to impose car rates in Canada unless signing an update text by the end of Sunday. Washington already has an agreement with Mexico, the third member of NAFTA.
As a sign of increasing pressure, Canadian Foreign Minister Chrystia Freeland postponed her country's annual address to the United States General Assembly on Saturday to return to Ottawa. Freeland, who spent several days in Washington last month, has no plans to return immediately, the official said.
The two sides are continually talking over the phone and a Canadian government source said the tone of the negotiations was positive and intense.
"It is not wise to put the horse before the cart – the discussions are continuing, which shows that there are problems to be solved. An agreement is not necessarily going to happen, "said the source, who requested anonymity given the sensitivity of the situation.
The United States attributes to NAFTA the fact that US manufacturing jobs have migrated to Mexico at low wages and require major changes.
A second source in Ottawa – who also asked to remain anonymous – said that both parties were still trying to resolve disputes over a dispute resolution mechanism that Canada considers vital and that the United States wants to remove.
In exchange for a compromise on the mechanism, Prime Minister Justin Trudeau's government should comply with the US request to provide much greater access to the Canadian market for protected dairy products, the source said.
This could cause problems for Trudeau, since the lobby of politically influential Canadian farmers states that he opposes any concession. Government insiders say that it is likely that Ottawa should offer significant compensation.
An agreement seemed unlikely Wednesday when, after a month of slow talks, Trump said he was fed up with Trudeau, who insisted he would not sign a bad deal.
But on Thursday night, US officials asked Canada for details of Ottawa's bargaining demands and compromises, Reuters reported.
Trump is under increasing pressure from US business groups and some US Congressmen, who say excluding Canada from NAFTA would hurt the increasingly integrated economies of the three member countries.
Reportage of David Ljunggren; Edited by Alistair Bell
