Canada's Freeland to hold NAFTA talks on Tuesday as time runs short

Rep. Tom Reed attends a committee hearing on in the Longworth Building in Washington D.C. on Feb. 14 2018

After more than a year of talks, Canada and the United States are still trying to resolve differences over the North American Free Trade Agreement, which also includes Mexico.

The officials have held two weeks of talks but ended Friday afternoon without reaching an agreement that would keep Canada in the three-nation pact.

President Donald Trump has notified Congress of his intent to sign a trade agreement with Mexico, with Canada welcome to join the deal "if it is willing", the White House said Friday.

Trudeau meets on Tuesday with the Dairy Farmers of Canada, which suspect he might be ready to sell them out.

A Canadian source with knowledge of the NAFTA discussions says an agreement is within reach, but getting there will require flexibility from all sides.

"I think we understand there are certain issues on which we will need to compromise", one of the sources said when asked about increased dairy access for the USA industry.

Under that system, the US exports about $500 million of dairy products duty free to Canada - three times what it imports from here - but faces tariffs of up to 300 per cent for anything more.

Last week, as the The Globe and Mail reported, Mr. Trump's trade chief, Robert Lighthizer, refused Ottawa's key demand, the preservation of the Chapter 19 dispute-resolution system, in order to extract maximum concessions from Canada on its protected dairy market and pharmaceutical patents.

She said the talks were at a point where discussing them face-to-face with the prime minister "is absolutely essential".

After leaving the U.S. Trade Representative offices following an initial meeting on Tuesday, Freeland described a positive atmosphere as the two sides work "extremely intensively".

"We're looking for a deal which is good for Canadians, which is good for Canadian workers, which is good for Canadian families (and) good for Canadian farmers", Freeland said on "The West Block".

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The U.S. has said it plans to present Congress with the deal it has with Mexico if Canada doesn't get on board.

USA officials have said time is running out to agree on a text that can be signed by American, Canadian and Mexican leaders by November 30, before the current Mexican government leaves office.

"Without Chapter 19, NAFTA is utterly useless as it would subject Canada and Mexico to the vagaries of the USA political system and its courts when determining trade policy actions", said Derek Holt, vice-president at Scotiabank Economics, in a note recently.

Experts note that the desire to make a trade deal happen is influenced by upcoming political events, including the US midterm elections in November, a transition of presidential power in Mexico in December and next year's Canadian election.

It also wants significant new access to Canada's sheltered dairy industry and seeks the relaxing of foreign ownership restrictions on Canadian media companies.

"We have been very clear on that, that there can not be more access given", Wiens said in a telephone interview.

Canada's dairy farmers believe they've already given enough to foreign producers in previous trade deals and aren't interested in ceding any more ground.

In 2016, after yielding greater market access under the European Union deal, Trudeau's government paid dairy farms and processors hundreds of millions of dollars to compensate and is expected to pay out again for the Pacific deal.

On Canadian soil, a prominent American voice was expressing much the same sentiment.

But U.S. economists argue the dispute resolution is "on the balance".

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