Canadian Prime Minister Justin Trudeau said Wednesday that it was possible that his government would reach an agreement by the end of the week with the U.S. and Mexico to sign off on their recent bilateral trade deal.
The U.S.-Mexico agreement reached this week excluded Canada but would effectively rewrite the North American Free Trade Agreement, creating potential turmoil among the trade partners. It is unclear if Canada could stop the deal, but several stakeholders, including Mexican President Enrique Pena Nieto, had urged that Canada be included to avoid any complications.
Trudeau indicated that the three parties may be able to smooth things over. “I understand that the Americans and Mexicans very much want to try and get things done by Friday and we’re seeing if we can get to the right place by Friday, but as I’ve said all along it has to be the right deal for Canada and that’s what we are staying firm on,” Trudeau said at a press conference in northern Ontario.
[Opinion: By bullying Canada on NAFTA Trump is trading long-term alliance for personal political victory]
Canadian Foreign Minister Chrystia Freeland is meeting with U.S. Trade Representative Robert Lighthizer in Washington Wednesday to address the U.S.-Mexico deal and the eventual restart of three-way NAFTA talks.
The main provision of the U.S.-Mexican agreement raised to 75 percent, up from 62.5 percent, the amount of North American-made parts needed for a car or truck to be duty-free under NAFTA. It also required that at least 40 percent of all auto content be made by workers making at least $16 an hour or its equivalent. Both changes would force auto manufacturers to move more production back into the U.S.
Most of the details of the agreement would little impact on Canada’s economy, but the precedent of a side deal that would replace elements of NAFTA — President Trump went so far as to say the deal would “terminate” NAFTA — was a problem for Canada, which had relied on Mexico to provide a united front against the U.S. in the talks. Trudeau’s comments indicate that he wants to avoid a direct confrontation over the deal.
It is unclear what Canada could have done to oppose the deal, though, which requires only congressional approval. Trade policy analysts said that Canada had no apparent legal way to intervene and would have to rely on support in the U.S. Congress to stop it.
