US, Canada set for talks to revise Nafta

WASHINGTON: With a deal with Mexico out of the way, US trade officials are due to resume talks with Canada on Tuesday to try to salvage the North American Free Trade Agreement as a trilateral accord.

After months of intense negotiations, the United States and Mexico announced an agreement Monday on a thorough overhaul of the 25-year-old free trade pact but President Donald Trump suggested he could cut Ottawa out.

Canadian Prime Minister Justin Trudeau stressed in a phone call with Trump on Monday the aim was to reach a new Nafta deal.

The leaders “had a constructive conversation” on Nafta, and “look forward to having their teams engage this week with a view to a successful conclusion of negotiations,” Trudeau’s office said.

Canadian Foreign Minister Chrystia Freeland interrupted a trip to Europe to rush back to Washington to begin talks with US Trade Representative Robert Lighthizer.

But it remains unclear when the trade officials will begin their discussions or whether the first meeting will happen Tuesday after all.

Mexico’s President Enrique Pena Nieto and President-elect Andres Manuel Lopez Obrador both said Nafta should remain a trilateral deal.

The outlines of a Nafta 2.0 are now on paper, including provisions on auto trade, tougher worker protections and a provision to review the deal every six years.

“It’s a really good deal for both countries,” President Trump said in announcing the agreement from the Oval Office.

Negotiators have worked for a year to update and rewrite Nafta but in the last five weeks Washington and Mexico City held talks to resolve their bilateral issues, especially on the auto industry rules, without Ottawa.

Trump stressed that he could go ahead without Ottawa in the new agreement.

“We could have a separate deal or we could put it in the same deal,” Trump said.

He indicated he would take a tough line with Canada on autos and dairy tariffs, long a source of tension between the neighboring countries.

Time pressure: White House economic adviser Larry Kudlow reiterated that point on Tuesday, saying the United States would not accept continued steep tariffs on dairy exports.

“There’s a word that Canada has trouble with – it’s M-I-L-K,” Kudlow said on Fox News.

The Canadian government effectively sets production quotas and the price of milk, which ends up costing consumers a bit more but provides farmers with a stable income.

The system has been in place since the 1970s and has survived several attempts to undo it — as well as the prohibitive tariffs that limit foreign imports.

However, US Treasury Secretary Steven Mnuchin said the administration was keen to get Canada on board quickly.