Trump, Trudeau dig in as NAFTA talks resume

The U.S. and Canada resumed negotiations Wednesday to hammer out the final details of an updated North American Free Trade Agreement (NAFTA) before an end of September deadline.

The two major trading partners spent most of last week trying to whittle down and resolve the toughest issues ahead, such as more U.S. market access to Canadian dairy, intellectual property protections and dispute settlement rules.

Before heading in to meet with U.S. Trade Representative Robert Lighthizer, Canadian Foreign Minister Chrystia Freeland told reporters that the U.S. and Canada had worked over the weekend and she was looking forward to constructive talks.

{mosads}Freeland addressed concerns that Canada was being left behind, saying: “We are back, as we said we would be last week.”

But despite the public optimism, negotiators face a tough task ahead.

President Trump and Canadian Prime Minister Justin Trudeau have each staked out their positions, raising the temperature of the negotiations, which restarted last week after a five-week break. 

Trump is embarking on a high-stakes gamble, cutting a deal with Mexico first, in hopes of forcing Canada to acquiesce. Last week, Trump notified Congress of his plans to sign a trade deal with Mexico, replacing NAFTA.

Trump lashed out at Canada after talks last week failed to yield a final deal. 

He said on Twitter that “there is no political necessity to keep Canada in the new NAFTA deal.”

“If we don’t make a fair deal for the U.S. after decades of abuse, Canada will be out,” he tweeted.

He reiterated his views again at the White House on Wednesday saying that Canada and “other countries have been taking advantage of the United States for many years.”

He called NAFTA “a very stupid deal.”

But Trudeau is also digging in and vowing that Canada won’t be pressured into a deal.

“We’re going to continue to be constructive and thoughtful and focused on getting to the right deal around the table but we’re not going to accept that we should have to sign a bad deal just because the president wants it,” Trudeau said Wednesday during an Alberta radio interview, taking a tough stance.

“We’ll walk away and not sign a bad deal for Canadians,” he vowed. 

Trump could face resistance from Congress, which is unlikely to back any deal that doesn’t include all three NAFTA partners.

He warned Congress on Wednesday not to “interfere” with the negotiations and said he would “simply terminate NAFTA entirely and we will be far better off.”

But Congress makes the trade rules in the form of trade promotion authority. If the Trump administration meets congressional objectives for a trade deal they can fast-track a new NAFTA through Congress without lawmaker changes.

There are however a number of contentious issues in the U.S.-Canada talks.

Trudeau on Wednesday insisted that Canada would work to maintain a dispute settlement process in the deal, provisions that the U.S. prefers to ditch. Dispute settlement would give Ottawa the ability to challenge U.S. tariffs and ensure that Canada maintains certain cultural exemptions, industries or arts that are seen as part of the country’s identity.

“We need to keep the Chapter 19 dispute resolution because that ensures that the rules are actually followed. We have a president that doesn’t always follow the rules as they’re laid out,” Trudeau said in a radio interview. 

During a brief break in the talks, Freeland emerged to say that Canada will stand up for its “national identity” in areas such as media.

Trudeau has deemed the cultural exemptions a red line and something that must be included in any new agreement. 

“We can’t imagine a situation in which an American TV company or network could come up and buy radio stations or buy, you know, CTV for example,” Trudeau said earlier in the day, referring to a major Canadian broadcasting network.

“That would not be good for Canada. It wouldn’t be good for our identity. It wouldn’t be good for our sovereignty.”

Another hot topic is dairy products. Trudeau insisted that Canada has shown flexibility on dairy in other trade agreements and will take the appropriate steps with its close trading partner. 

Both sides are feeling pressure to finalize a deal.

In the U.S., businesses, farmers, unions and Congress insistent that there must be a three-nation agreement.

“If you break off one member of this agreement, you break it all, and that would be bad news for U.S. businesses, for American jobs and for economic growth,” said U.S. Chamber of Commerce President and CEO Thomas Donohue.  

“Anything other than a trilateral agreement won’t win congressional approval and would lose business support,” Donohue said in a statement after talks failed last week. 

Sen. Ron Wyden (D-Ore.), the ranking member of the Senate Finance Committee, which oversees trade, said this week that the president can’t unilaterally withdraw from NAFTA, a move Trump has repeatedly threatened to make. 

“The president needs to take a look at the Constitution — it gives Congress authority over trade. The president cannot pull America out of NAFTA without Congress’ permission,” Wyden said in a statement.

“The president doesn’t have a deal, he doesn’t have a plan, and he doesn’t even have the power to follow through on his empty threats. The president needs to take a look at the Constitution – it gives Congress authority over trade. The president cannot pull America out of NAFTA without Congress’s permission,” Wyden said.

Last week, the White House announced a handshake deal with Mexico and submitted that agreement to Congress on Friday, giving the countries 90 days to sign the deal with Mexico and Canada “if it was willing.” 

Lighthizer must submit the text of a deal to Congress by month’s end.