Canada's Freeland sees "very good progress" in NAFTA trade negotiations

WASHINGTON (Reuters) – Canada's chief negotiator said on Friday that she and her US counterpart had made "very good progress" in talks to save the North American Free Trade Agreement.

Canadian Foreign Minister Chrystia Freeland reiterated her optimistic assessment of the negotiations, again calling them constructive, while she addressed reporters after talks in Washington with US Trade Representative Robert Lighthizer .

"We are certainly making very good progress in mutual understanding, understanding what each side needs," Freeland said.

The main point of disagreement in the talks seems to be Canada's milk quota system, according to White House chief economics advisor Larry Kudlow, who spoke before the start of the latest talks.

Kudlow stated "M-I-L-K" in an interview with Fox Business Network to focus.

President Donald Trump concluded a trade deal with Mexico and threatened to pursue without Canada, a measure that would kill NAFTA, which covers $ 1.2 trillion in trade between the three countries, and which still has shaken the financial markets.

Ottawa's willingness to retain the dispute settlement mechanism of Chapter 19 of the 1994 Pact and Canadian media laws that favor domestic production are other areas of contention.

"I'm working on Canada now," Trump told reporters aboard Air Force One. "You know, people can say, 'Oh, I'm too tough on Canada. Look, Canada has been scamming us for a long time. And now, they must treat us fairly.

A Canadian source, who declined to be named in light of the sensitivity of the situation, said Canadian negotiators thought it was entirely possible for discussions to continue until the end of the day. end of the month.

A US official told Reuters on Thursday that Canada needed to go further in the dairy sector. In its recent trade agreement with the European Union, Canada has made concessions on imports of dairy products.

"We have three issues: chapter 19, cultural issues and dairy products. We have created leverage and led Canada to the table, "said the US official. "Part of our problem is that Canada has fallen back on its commitments (for dairy products)."

Trump has targeted what he sees as an "unfair" trade under its "America First" program to boost production and jobs in the United States, by imposing tariffs on trading partners, including Canada, China, the EU and Mexico. This provoked reprisals.

Tens of billions of dollars in Chinese imports have been hit by US tariffs, and a new rights cycle is expected soon.

Canada and Mexico both want Trump to agree to permanently exempt them from US tariffs on steel and aluminum imports. Washington has used these tariffs as a lever in the NAFTA negotiations.

For its part, Canada has used the provisions of the NAFTA dispute settlement mechanism to defend its lumber exports to the United States. Washington alleges that Canadian lumber unfairly reduces US lumber prices.

APPROVAL OF THE CONGRESS

Negotiators and their staff organized several night sessions to overcome this week's disagreements.

"We are really in a phase of continuous negotiation," said Freeland.

Kevin Brady, Republican Chairman of the House of Representatives Committee of Ways and Means, told reporters that the milk quota system, the trade dispute settlement procedure. "

"My feeling is that everyone is at the table with the intention of working on these last issues always difficult," Brady told reporters after speaking with Lighthizer on Thursday.

Trump informed Congress that he intended to sign the trade agreement reached last week with Mexico at the end of November, and officials said the text would be posted to October 1st.

Despite pressure from Washington to sign an agreement similar to the one with Mexico, Ottawa resisted. Canadian officials are also aware that US companies and labor groups are pushing Trump to maintain NAFTA as a trilateral agreement.

Negotiators have exceeded several deadlines since talks began in August 2017. In Washington, some say that Trump can not withdraw from NAFTA without congressional approval.