U.S. won't wait for Canada pact in NAFTA deal

Trade rep says America will move forward with Mexico

U.S. Trade Representative Amb. Robert Lighthizer testifies on trade policy before the House Ways and Means Committee at Capitol Hill, Wednesday, March 21, 2018, in Washington.
U.S. Trade Representative Amb. Robert Lighthizer testifies on trade policy before the House Ways and Means Committee at Capitol Hill, Wednesday, March 21, 2018, in Washington.

The U.S. is moving forward on its bilateral trade deal with Mexico by month's end even if Canada is left out because negotiators can't resolve their sharp differences over dairy and a dispute resolution system, U.S. Trade Representative Robert Lighthizer said.

The Trump administration soon plans to present to Congress a text of the U.S.-Mexico trade agreement that was announced last month to revise portions of the North American Free Trade Agreement, Lighthizer said at an event in New York on Tuesday.

The administration wants to notify Congress of its plans for a new North American accord by Sunday to meet a timetable permitting the current Mexican president, Enrique Pena Nieto, to sign it on his final day in office Nov. 30, before he's succeeded by Andres Manuel Lopez Obrador in December. That arrangement is acceptable to Lopez Obrador.

Under a U.S. legal process known as Trade Promotion Authority that was invoked to revamp NAFTA, American lawmakers need to review the text of the agreement 60 days before President Donald Trump can sign it.

"If we push it beyond that date, then we have a new negotiation with Lopez Obrador and we don't know where that would go at all," Lighthizer said. "It would be unfair to all the people that have been involved -- certainly the U.S. workers, farmers and ranchers -- to start a new negotiation with a new president of Mexico."

Some on Capitol Hill say there may be some wiggle room on the end-of-September deadline. Congress could take several routes to allow the administration to submit a final agreement in October or later, but still allow Trump to sign the deal in November. Several congressional staff members stressed in interviews this month that the deadline is only binding if Congress chooses to enforce it` -- and that it may choose not to.

Canada's internal politics are also a factor given provincial elections on Monday. The Canadian government may be reluctant to finalize any agreement that contains dairy concessions before a vote in Quebec, whose economy is heavily dependent on dairy, trade analysts said.

The U.S. and Canada are at odds over anti-dumping dispute panels contained under Chapter 19 of the current deal, which the U.S. wants to remove and Canada wants to keep. Another sticking point is Canada's protected dairy industry, which isn't in the current deal but where the U.S. wants concessions.

The U.S. wants to see the three-way pact remain intact, and the U.S. remains committed to keeping Canada in the deal now or to let it join later, Lighthizer said.

"I think Canada would like to be in the agreement, I think the U.S. would like them in the agreement," Lighthizer said. "Hopefully, we'll end up with something with Canada. If not, we'll have to do it in a separate deal as soon afterwards as we can."

Trump has previously floated the idea of striking two separate bilateral trade deals with the NAFTA partners.

Whether Congress will pass a deal that doesn't include Canada remains unclear. While some lawmakers have ratcheted up pressure on Canada to sign, others such as Nancy Pelosi have said the Trump administration should reach a trilateral deal. Some have warned that U.S. trade law won't allow a Nov. 30 vote on a U.S.-Mexico deal, because the Trump administration began the process seeking a trilateral one.

Tim Scott, R-S.C., said Tuesday he'd prefer Canada be included, and wouldn't say if he'd vote for a bilateral U.S.-Mexico deal. "I think it's important to keep North America together, even if it takes more time" he said. "The timing has to do with politics, and not ours."

At a separate event in New York, Canadian Prime Minister Justin Trudeau addressed trade tensions alongside his foreign minister, Chrystia Freeland, who is leading NAFTA talks. Trudeau said the deal between the U.S. and Mexico raises the "possibility" of Canada signing on, but that he's standing up for Canadian interests in negotiations.

Freeland declined to comment specifically on Chapter 19, saying only that "rule of law is an extremely important part of how we do things, including trade."

Negotiations for possible exemptions for Mexico and Canada from U.S. steel and aluminum tariffs imposed earlier this year will take place after the new NAFTA deal is agreed on, said Lighthizer.

Trump is serious about renaming NAFTA, possibly to the U.S.-Mexico-Canada pact, or USMC, Lighthizer added.

Despite Lighthizer's threat to move ahead with just Mexico, he did not suggest breaking off trade relations with Canada if it fails to meet this month's deadline. He said that the United States and Canada would continue trade talks and try to come up with a separate deal as soon as possible.

The one promise that Lighthizer would make was that Trump would not let the new deal be called "NAFTA" -- an agreement which he has derided for years as a failure.

"The president is not going to call it NAFTA," he said. "We'll call it something else."

Trump said earlier this month that he would like to call the revised deal the United States-Mexico-Canada agreement, or USMC.

Information for this article was contributed by Jeanna Smialek and Jenny Leonard of Bloomberg News and by Alan Rappeport of The New York Times.

A Section on 09/26/2018

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