With trade talks between the U.S. and Canada ending on Friday with no deal to revamp NAFTA after "insulting" Trump comments from his Bloomberg interview were leaked by the Canadian press, the US president notified Congress of his intent to sign a bilateral trade pact with Mexico in one month, while agreeing to keep talking to Canada.
The move by Trump to notify Congress that he planned to sign a deal with Mexico in 90 days and would include Canada "if it is willing" avoided what many in the U.S. business community and Congress had seen as a worst-case scenario, according to Bloomberg.
The president threatened earlier this week to go ahead with a bilateral trade agreement with Mexico that would leave out Canada, which he on Friday again accused of “ripping us off.”
Sending the notification to Congress effectively sets a new clock for the Nafta negotiations. Under rules set by Congress, the administration is now facing a 30-day deadline to provide a full text of the agreement.
Following four days of intensive talks in Washington between Canada and the United States during which "progress" was made - but not enough to reach a successful deal - the biggest sticking points remained open: U.S. demands for more access to Canada’s closed dairy market and Canadian insistence that the "Chapter 19" trade dispute settlement system be maintained, not scrapped as Trump wants.
“We know that a win-win-win agreement is within reach,” Chrystia Freeland, the Canadian foreign minister, told reporters in Washington after talks wrapped up on Friday. But “Canada will only sign a deal that’s a good deal for Canada, we are very, very clear about that,” she added. She declined to identify the trickiest issues that were holding up a deal.
Initially deal sentiment was optimistic, and markets expected a favorable outcome from the negotiation after a bilateral deal was announced by the US and Mexico on Monday which paved the way for Canada to rejoin the talks this week with a Friday deadline looming. But on Friday sentiment turned, partly on Trump’s explosive off-the-record remarks made to Bloomberg News that any trade deal with Canada would be “totally on our terms.” He later confirmed the comments, which the Toronto Star first reported.
“At least Canada knows where I stand,” Trump said on Twitter later.
Wow, I made OFF THE RECORD COMMENTS to Bloomberg concerning Canada, and this powerful understanding was BLATANTLY VIOLATED. Oh well, just more dishonest reporting. I am used to it. At least Canada knows where I stand!— Donald J. Trump (@realDonaldTrump) August 31, 2018
Later on Friday, Trump notified Congress that he intends to sign the trade pact by the end of November. Text of the deal will be published by around Oct. 1.
Congressional approval of a bilateral deal as replacement to the trilateral NAFTA, however, is unlikely.
According to Reuters, U.S. lawmakers and business groups have expressed concern about Canada’s not yet being not yet part of the agreement. "Anything other than a trilateral agreement won’t win Congressional approval and would lose business support,” the chief executive of the U.S. Chamber of Commerce, Thomas Donohue, said in a statement.
There are other potential complications: Trump had been pushing to get a new Nafta approved under a process known as fast-track authority that allows him to seek a simple yes-or-no vote in Congress on trade deals, as long as his administration clears certain procedural hurdles.
Under fast-track rules, Trump must notify Congress 90 days before signing the deal. The White House set a deadline for Friday because it wanted to notify Congress in time for Mexican President Enrique Pena Nieto to sign the accord before his successor, Andres Manuel Lopez Obrador, takes office on Dec. 1.
However, any vote in U.S. Congress is unlikely to take place before 2019. By then, the Democrats may control at least one chamber of Congress, and Nancy Pelosi, the minority leader in the House of Representatives, made clear on Friday that any deal must include Canada.
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Meanwhile, even as the US announced it would continue talks with Canada next Wednesday, it is unclear who will compromise first or when, especially after Trump's controversial comments were leaked.
U.S. Trade Rep Robert Lighthizer has refused to budge despite repeated efforts by Freeland to offer some concessions on dairy to maintain the independent trade dispute resolution mechanism under Chapter 19 of NAFTA, The Globe and Mail reported on Friday.
In response, a USTR spokeswoman countered that Canada had made no concessions on agriculture, which includes dairy, but said that negotiations continued.
Trump has argued that Canada’s dairy tariffs are hurting U.S. farmers, an important political base for his Republican party. But as Reuters notes, "dairy farmers have great political clout in Canada, too, and concessions could hurt the ruling Liberals ahead of a 2019 federal election."
On Saturday morning, Trump echoed a statement he made during a Friday speech in North Carolina when he took another swipe at Canada. “I love Canada, but they’ve taken advantage of our country for many years,” he said.
I love Canada, but they’ve taken advantage of our Country for many years!— Donald J. Trump (@realDonaldTrump) September 1, 2018