Published: Mon, October 01, 2018
Money | By Armando Alvarado

US, Canada Reach NAFTA Deal

US, Canada Reach NAFTA Deal

The three countries reached an agreement to replace the 24-year-old North American Free Trade Agreement, according to a joint statement from U.S. Trade Representative Robert Lighthizer and Canadian Foreign Affairs Minister Chrystia Freeland on Sunday.

According to people briefed on the negotiations, Canada will ease protections on its dairy market and provide access that is similar to what the United States would have gained through the Trans-Pacific Partnership, a trade treaty that Trump withdrew from a year ago.

The United States and Canada reached a deal on Sunday to salvage NAFTA as a trilateral pact with Mexico, beating a midnight deadline with agreements to substantially boost American access to Canada's dairy market and protect Canada from possible USA auto tariffs, sources with direct knowledge of the talks said.

Canada's high tariffs on most US dairy products had become the main point of contention that had stalled the negotiations for months, making the prospect of Canada joining the US-Mexico deal, struck in August, increasingly feeble.

Reports of a deal caused a jump in the Canadian dollar on early Asian trading with the loonie up 0.7% from its Friday close at $1.2814. Canada also wanted to keep a NAFTA dispute-resolution process that the USA wanted to jettison.

"Everybody's negotiating in good faith right now as we speak and the deadline is midnight tonight to get the text in to Congress in order to make sure this goes forward", said Navarro.

"Lots of progress, but we're not there yet", Canada's ambassador to Washington, David MacNaughton, told reporters. To meet that deadline, the text of the agreement had to be submitted to Congress before October. The two sides were hoping to finalize the pact overnight ahead of an announcement on Monday, The Globe and Mail said. That started a 90-day clock that would let outgoing Mexican President Enrique Pena Nieto sign the new pact before he leaves office December 1.

Trump has been pushing for a complete overhaul of the agreement which he says has been a "rip-off" for the United States.

Anti-dumping duties are protectionist tariffs that a domestic government imposes on foreign imports if they are priced lower than fair value.

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A senior U.S. administration official said the final rewrite is a "fantastic agreement" and he called it "a big win for the United States, Mexico and Canada".

But the ensuing talks to incorporate Canada have stumbled.

It also appears to preserve the key dispute-resolution provisions - Chapter 19 - which allows for independent panels to resolve disputes involving companies and governments, as well as Chapter 20, the government-to-government dispute settlement mechanism.

Trudeau has promised repeatedly to keep the country's supply management system intact, despite pressure from Trump. The issue has also figured prominently in Quebec, where voters go to the polls in a provincial election on Monday.

Tempers flared this week on both sides as the end-of-month deadline approached.

Trump threatened to go ahead with a revamped NAFTA - with or without Canada.

Trudeau fired back: "We won't sign a bad deal for Canada".

A fourth Canadian source directly familiar with the negotiations said any suggestion Ottawa would accept a cap or quota on autos exports was completely inaccurate.

As part of any agreement, Canada looks set to offer increased access to its highly protected dairy market, as it did in separate pacts with the European Union and Pacific nations.

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