Canada, US race against midnight deadline for revamping NAFTA

Canadian Foreign Affairs Minister Chrystia Freeland speaks to the media as she arrives at the Office of the United States Trade Representative Tuesday Sept. 11 2018 in Washington

With little time left ahead of a deadline to agree to a renewed NAFTA, Canadian and USA trade officials on Sunday tried to settle differences on tough issues such as protection against American tariffs.

U.S. Congress declared midnight Sunday as the deadline for Canada to join the existing agreement between the U.S. and Mexico.

David McNaughton, Canada's ambassador to Washington, also tamped down talk of a deal earlier Sunday evening during brief comments to reporters in Ottawa, saying he was "cautiously optimistic" but not sure the discussions would be resolved Sunday or Monday.

"We still have a couple of tough issues, so we're doing our best".

Federal cabinet ministers were summoned to a late Sunday meeting at the Prime Minister's Office near Parliament Hill, while the White House convened its own late-night trade briefing conference call just an hour before the midnight deadline.

The agreement includes a quota on automobile shipments to the USA and a greater level of access to Canada's dairy market.

The US and Canada have reached a deal to reform the North American Free Trade Agreement (Nafta) after last minute negotiations.

A protectionist policy under the Mr Trump has seen the U.S. forge ahead with individual trade deals, rejecting bigger multi-lateral trade agreements and posing a challenge to decades of global free trade.

One of the Canadian sources said Ottawa would take nothing for granted until Trump had signed off on a deal. "It makes no sense to me to repeat that with a new NAFTA".

Negotiators from the three countries began talks about updating NAFTA more than a year ago.

Congress gave Trump's administration authority to renegotiate a trilateral continental free trade pact, which requires a 60-day notice and publication of the text of any agreement.

Dispute resolution: Chapter 19, an extrajudicial trade dispute system that allows NAFTA members to bring grievances against other members over allegedly unfair trade practices, will remain in place as it is under the current NAFTA.

On the Today programme, Laura Cooper, strategist at RBC, has been discussing the new US-Canada trade deal. Canada also agreed to open up some of its dairy market to U.S. producers.

Canada, for instance, agreed to give the Americans access to five per cent of the Canadian dairy market, about the same it granted to European and Pacific-Rim nations in the CETA and TPP accords combined, the source said. In August a year ago, he started a review of the trade pact with Mexico and Canada that opened up negotiations.

Under the current system, USA imports exceeding quota levels are subject to excessively high tariffs, such as 245 percent for cheese and 298 percent for butter.

"It's a good day for Canada", Prime Minister Justin Trudeau said as he left his office.

The new deal must now go to Congress for approval, with a vote not expected until next year, after midterm elections.

Though, one of the senior USA administration officials who briefed reporters on background Sunday night described Canada's concessions on dairy as "a big win" for American farmers. But Dan Ujczo, an worldwide trade lawyer with the US firm Dickinson Wright, said it would only apply to a very small percentage of vehicles that don't comply with the origin rules.

A side-letter to the agreement showed that Trump preserved the ability to impose threatened 25 percent global tariffs on autos while largely exempting passenger vehicles, pickup trucks and auto parts from Canada and Mexico.

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