Trump, Trudeau dig in as NAFTA talks resume

Daniel Fowler
September 7, 2018

-Canada negotiations had initially generated hopeful signals from both camps that a deal could be struck by the end of the week - but hard discussions about dairy and dispute settlement persisted. The chapter has been repeatedly used by Canada to fight US tariffs on softwood lumber. "Canada's the main trading partner for many states, quite a bit of our economic fortunes are entwined with Canada".

His annual report on barriers to US trade this year singled out the Canadian Radio-television and Telecommunications Commission's decision in 2015 to ban the long-time practice of Canadian advertisers inserting their ads into the Super Bowl broadcast over the more popular American ones.

With the USA midterms eight weeks away, and Trump facing pressure to maintain the Republican hold on the House and Senate, the influence of Congress will permeate the resumption of Wednesday's talks. China has already said it will retaliate.

Canada wants a permanent exemption from Trump's steel and aluminum tariffs, and removal of the threat of auto tariffs from Washington, as well as to preserve its dairy regime and market access for its lumber products. Trump had hoped unions would lean on Democrats to back his approach.

But it was drafted in a pre-digital, pre-Internet age, and while Canada has said it is open to "modernizing" NAFTA, it continues to insist on a "robust" exception to free trade for cultural industries. The United States and Mexico reached an agreement on overhauling NAFTA at the beginning of last week, turning up the pressure on Canada to agree to new terms.

If neither side budges, it's unclear whether Trump can withdraw from NAFTA without congressional approval, though Trump has said he can do so unilaterally.

Lawrence Herman, an worldwide trade counsel, said it prevents USA takeovers, restricts US ownership and ensures Canadian artists - such as authors, actors and musicians - get certain preferences. Trump is threatening to move ahead on a deal with Mexico that excludes Canada.

U.S. President Donald Trump has threatened to push ahead with a bilateral deal with Mexico, effectively killing the nearly 25-year-old three-country pact, which covers $1.2 trillion in trade.

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Both Canadian and USA negotiators insist they have been making progress with talks due to resume Wednesday.

"There's political consensus in Canada to keep the Chapter 19 dispute resolution mechanism, and if the government goes back on its position it will be bad for Mr. Trudeau and his government", said Antonia Maioni, a political scientist at McGill University in Montreal.

NAFTA's Chapter 19 allows companies who feel wronged by anti-dumping, or countervailing duties, to have their issues settled by independent panels of experts from the countries caught in the dispute. "We have a president that doesn't always follow the rules as they're laid out", Trudeau said in a radio interview. -Canada pact that served as a precursor to NAFTA as well as the early 1990s NAFTA negotiations. They appear to be mirroring the rhetoric of the Trump administration, which insists that it is pursuing a better deal for USA citizens.

As the two sides met for talks, new economic data showed that the USA trade deficit with Canada continues to grow, hitting US$3.1 billion in July, potentially providing ammunition to Trump who has accused Canada of "cheating" Americans.

Trump administration officials and Canadian negotiators are resuming talks to try to keep Canada in a North American trade bloc with the United States and Mexico.

The text of the new trade deal still remains largely under wraps.

The problem for Trump is that USA business and farm groups as well as a broad bipartisan swath of legislators say they will oppose any deal that doesn't include Canada.

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