Canadian Official Says NAFTA Talks Will Continue This Summer

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By Rossella Brevetti and Len Bracken (Bloomberg Law)

North American Free Trade Agreement negotiations will continue through the summer as the three countries will work toward updating the agreement, Canadian Foreign Minister Chrystia Freeland said June 14 after a meeting with U.S. Trade Representative Robert Lighthizer.

Freeland did not specify when the talks would ramp up again, but has reiterated Canada’s stance that the talks should continue as a three-way conversation instead of breaking into separate bilateral negotiations-- a position often pushed by the U.S.

Sources say the talks have stalled over the past several weeks and really hit rock bottom after the U.S.-Canada spat following the G-7 meeting in Canada.

NAFTA talks have been a roller coaster ride of on-again off-again negotiations, punctuated by repeated threats from President Donald Trump to withdraw from the agreement entirely. In fact, one private-sector source told Bloomberg Law just before the Freeland announcement that Trump and his trade team were again discussing the possibility of a notice of withdrawal.

Freeland’s announcement also may have headed off separate talks between the U.S. and Mexico as the U.S. was pressing Mexico to agree to a bilateral pact, sources told Bloomberg Law.

The U.S. wanted to step up negotiations with Mexico toward an agreement and then present that to Canada on a “take-it-or-leave-it basis,” sources said.

Officials from the U.S., Canada, and Mexico could not be reached for comment on this story.

An attorney close to lawmakers briefed on the talks, who asked not to be named, said it was unclear whether Mexico was on-board with the U.S. plan or simply engaging in ongoing NAFTA talks toward an overall three-way agreement.

“I do believe the administration’s strategy is to get a deal with Mexico post-July 1 and use it to club Canada,” trade attorney Dan Ujczo, a Columbus-based trade lawyer with Dickinson-Wright specializing in U.S.-Canada issues, told Bloomberg Law in an email, citing a “composite” of sources. Ujczo said this before the Freeland announcement.

There were serious administration discussions close to the G-7 summit on June 8-9 about withdrawing from NAFTA, the anonymous source said, but the decision was made instead to move forward on a bilateral basis. So far, both Mexico and Canada have rejected the U.S. push for bilateral deals, according to the source.

USTR Optimistic on Mexico

Lighthizer told the Ways and Means Committee June 7 that he was optimistic about a deal with Mexico after the July 1 Mexican presidential election and before the Dec. 1 inauguration. He was not optimistic about a deal with Canada, the source said.

A Canadian industry source, who speaks regularly with Mexican and Canadian officials, told Bloomberg Law that Mexico is still saying they remain committed to a trilateral deal. However, he said he suspected this could change if the U.S. granted concessions on some of their red-line issues.

Rep. Richard Neal (D-Mass.), ranking member of the House Ways and Means committee, told Bloomberg Law June 13 that it was no surprise the U.S. is focusing the NAFTA negotiations on Mexico rather than Canada. “If you remember early on in the discussion, the president said that was a possibility, so it’s no surprise there at the moment,” he said. “I don’t think that’s the path we should travel on, but they did hint at that early on,“ he added.

Similarly, in response to a question on whether the U.S. is concentrating on Mexico during NAFTA renegotiations, House Ways and Means Chairman Kevin Brady (R-Texas) told reporters: “It certainly seems that way.” Lighthizer “for months has said he’s closer with Mexico on an agreement, then Canada,” Brady said June 13.

“In his discussion with us last week, he did talk about opportunities after the election in Mexico, where there might be an opportunity to find common ground later this fall,” Brady said.Sens. John Thune (R-S.D.) and Lindsey Graham (R-S.C.) told Bloomberg Law June 12 the U.S. intends to negotiate first with Mexico and then with Canada. The talks are focused on “Mexico first and Canada to follow, “ Thune said.

“They say they are on course and most of us have tried to defer to the president and his team to give them the opportunity to negotiate the best deal they can get,“ Thune said.Graham said the talks would “hopefully “ follow on to Canada.Thune said he and others have expressed concerns about agriculture and other sectors being adversely affected by retaliatory tariffs, responding to questions on steel and aluminum imports.The U.S. and Mexico have been quietly and actively continuing NAFTA discussions, one private sector source regularly briefed on the talks told Bloomberg Law. “It’s not clear where Canada is in that process,” she said.

With assistance from Reade Pickert and Josh Wingrove (Bloomberg)

To contact the reporters on this story: Rossella Brevetti in Washington at rbrevetti@bloomberglaw.com; Len Bracken in Washington at lbracken@bloomberglaw.com

To contact the editor responsible for this story: Jerome Ashton at jashton@bloomberglaw.com (Bloomberg Law); Greg Quinn at gquinn1@bloomberg.net (Bloomberg)

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