U.S. warns time is running out for Canada on NAFTA as Trump defends ‘America First’ approach

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Canada is “running out of time” to join a revamped North American free-trade agreement with the United States and Mexico, the top U.S. trade negotiator says.

Speaking on Tuesday in New York, U.S. Trade Representative Robert Lighthizer named the Chapter 19 dispute-resolution system, which Canada wants to preserve, and U.S. access to Canada’s protected dairy market as the major sticking points.

“There’s still a fair amount of distance between us," he said in an address to the Concordia Summit – a non-partisan forum held alongside the United Nations General Assembly. "There are very large issues. There are issues of dairy and Chapter 19. We’re sort of running out of time.”

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The United States reached an agreement with Mexico to overhaul NAFTA last month and is pushing Canada to sign on. Washington and Mexico City want to finalize the deal by Nov. 30, before Mexican President Enrique Pena Nieto leaves office. The United States and Mexico have said they will move forward without Canada if necessary. The U.S. government plans to send text of the deal to Congress by Sunday.

But even if Canada misses the deadline, Mr. Lighthizer said he would keep negotiating in hopes of concluding a deal later. “We’re not going to give up. They’re a huge trading partner.”

Prime Minister Justin Trudeau and U.S. President Donald Trump attended a lunch event on Tuesday, but neither had set aside time to sit down and talk about NAFTA. Mr. Trudeau approached the President and shook his hand as Mr. Trump remained seated. Speaking to the Council on Foreign Relations earlier, Mr. Trudeau said he and Mr. Trump are more focused at the UN on meeting with leaders they do not see as often.

“We speak every few weeks. We see each other at a whole bunch of different events,” Mr. Trudeau said.

The lunch-time encounter came shortly after Mr. Trump’s speech to the multilateral organization, where he defended his “America First” approach, rejected globalism and demanded respect for U.S. sovereignty.

“We will not allow our workers to be victimized, our companies to be cheated, and our wealth to be plundered and transferred,” Mr. Trump told the UN.

“America is governed by Americans. We reject the ideology of globalism, and we embrace the doctrine of patriotism.”

Foreign Affairs Minister Chrystia Freeland and Mr. Lighthizer, who are both in New York with their leaders for the UN General Assembly, also have no formal plans to discuss NAFTA while they are there.

Eric Miller, a Washington-based trade consultant, said the U.S. Trade Representative’s remark that he would continue talks with Canada after a U.S.-imposed deadline was an acknowledgement that Ottawa’s refusal to be pushed into a swift deal had succeeded.

“This ploy to try to use a deadline for pressure has failed again,” he said. “It’s a signal that the Canadian strategy is actually working.”

Mr. Miller said it would be possible to send text of a U.S.-Mexico deal to Congress on Sept. 30 and amend it later to include Canada. Congress is unlikely to vote on the pact until next year, he said, meaning Nov. 30 may not even really be a deadline for a deal.

Mr. Lighthizer also suggested Canada and Mexico cannot expect swift relief on steel and aluminum tariffs that the United States imposed on its NAFTA partners in June. He said he had hoped to reach agreement on the tariffs as part of NAFTA talks, but now is focused on finishing NAFTA before negotiating a separate deal on the levies.

“On steel and aluminum … we started off originally trying to have some kind of an overall agreement,” he said. “I think our view is that now we’ll turn to that as the next stage.”

Jean Simard, chief executive officer of the Aluminum Association of Canada, called any move to sign a free-trade agreement while the metal tariffs are in place “unacceptable.”

Mr. Simard said the industry needs “total and permanent exemption” from U.S. tariffs and quotas, as well as assurances such measures would not be applied later. “That’s not free trade,” Mr. Simard said.

In June, the first month Canadian steel and aluminum were subject to U.S. tariffs, steel exports to the United States fell by 37 per cent, and aluminum slipped by 7 per cent, compared with the previous month, Statistics Canada says.

Joseph Galimberti, president of the Canadian Steel Producers Association, called the 25-per-cent tariff significant, noting it had complicated customer relationships and upset long-established supply chains in Canada and the United States. “It’s not good,” he said by phone.

Mr. Lighthizer said NAFTA would be renamed the U.S.-Mexico-Canada trade deal, or USMC.

Whether the United States could actually proceed with a separate bilateral deal with Mexico is a matter of debate. Under U.S. trade rules, Congress gave the Trump administration authority to negotiate a three-way deal. Congress could, however, choose to accept a two-way pact.