NAFTA talks will resume Tuesday despite impasse over Chapter 19, dairy industry

NAFTA talks will resume Tuesday despite impasse over Chapter 19, dairy industry

The two sides have so far been unable to break an impasse over, among other issues, USA access to the Canadian dairy market, a cultural exemption for Canada and the Chapter 19 dispute resolution mechanism.

The uncertainty over the fate of NAFTA, in light of a tentative U.S. -Mexico trade deal, has not gone away even as trade experts note that members of Congress, concerned about the trade ties between the two countries, may help ensure that a final deal includes Canada.

USA officials say time is running out to reach a deal that the current Congress can vote on.

The in-person, high-level negotiations got back underway as events marking the 17th anniversary of the 2001 attacks took place around the US, including at the Pentagon with Vice President Mike Pence, not far from where the trade meetings are taking place.

U.S. President Donald Trump, who says he is prepared to tear up NAFTA, has struck a trade deal with Mexico and threatened to push ahead without Canada.

Freeland said on Friday she and Lighthizer were making "very good progress" in talks to save NAFTA amid increasing Canadian optimism that a deal can be reached.

"For this government to go out and be seen as giving too much to the American side on agriculture, and dairy in particular, would be ... nearly suicidal politically", Charest said.

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

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Uncertainly over the future of NAFTA, which underpins $1.2 trillion in trade, is weighing on markets as well as the Canadian and Mexican currencies.

Wednesday was the first day that negotiations between the two countries resumed after four intensive days of talks last week ended without a deal on Friday after the mood soured. Asked if it would be gone from a NAFTA deal, he said, "I think it should be".

"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.

Canada has reportedly offered to make concessions to its protected dairy industry, which has come under repeated attack from Trump, in an effort to retain Chapter 19.

"We have all been dealing in good faith", he said. But as an October 1 deadline to renegotiate NAFTA looms, Canada is prepared to offer similar concessions on the dairy industry to those that it agreed to in free trade deals with the European Union and Pacific Rim nations, the sources said.

The trade talks were overshadowed in Washington by the anniversary of the terrorist attacks of September 11, 2001, and Freeland took the opportunity to tout the importance of the US-Canada relationship. "They're really hammering this out", said Orr, who is now senior global trade adviser for a Washington law firm.

"We're just going to stay working constructively to get to that win, win, win that we know is there".

With the Mexico deal in hand, and Trudeau publicly indicating that Canada's red-line issues are Chapter-19 and cultural industries, the Americans have considerable leverage, he added. Eares are on the ground for United States and China developments but at the fore again was the NAFTA negotiations.

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