Nafta Talks Between U.S. and Canada Turn Tense as Deadline Looms

Nafta Talks Between U.S. and Canada Turn Tense as Deadline Looms

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WASHINGTON — Trade negotiations between the United States and Canada turned tense on Friday morning, as both countries struggled to reach agreement on several key issues and President Trump continued to disparage Canada and its trade practices.

The sudden rocky patch came after days of optimism from negotiators in both countries, raising the prospect that the last-ditch talks to salvage the North American Free Trade Agreement could falter.

The Trump administration had set a Friday deadline to strike a deal with Canada, threatening to move ahead with a bilateral trade pact with just Mexico if an agreement between the three countries could not be reached. After several days of marathon meetings that seemed to presage a deal, the chances of such an agreement by the end of Friday began looking doubtful.

Talks between the United States and Canada remain deadlocked over several contentious issues, including Canada’s dairy sector, its rules governing movies, books and other media, and a mechanism for settling trade disputes between the two countries, people briefed on the talks said.

On Friday morning, the United States trade representative put out a statement saying that Canada had yet to make any concessions on dairy products, which has become a source of ire for Mr. Trump.

“The negotiations between the United States and Canada are ongoing,” a spokeswoman for the United States trade representative said in a statement. “There have been no concessions by Canada on agriculture.”

The public statement was unusual for the traditionally tight-lipped office of Robert E. Lighthizer, Mr. Trump’s top trade negotiator.

Chrystia Freeland, Canada’s foreign minister, said repeatedly this week that Canada and the United States had agreed not to discuss the details of the talks in public while negotiations were taking place.

Arriving for a meeting with Mr. Lighthizer on Friday morning, Ms. Freeland said that she was looking forward to hearing what he had to say after a night of reflection. But after a meeting that lasted more than an hour, it appeared that the two sides were no closer to a deal.

“We are not there yet,” Ms. Freeland told reporters outside of the office of the United States Trade Representative. “Canada is a country that is good at finding win-win compromises — having said that, in trade negotiations, in this negotiation, we always stand up for the national interest and that is what we’re going to continue to do.”

She added: “We’re looking for a good deal, not just any deal.”

The talks were further complicated by a report in the Toronto Star on Friday that quoted off-the-record comments Mr. Trump gave during an interview on Thursday with Bloomberg News. According to that report, Mr. Trump said he had no plans to make concessions to Canada and that any agreement would be “totally on our terms.”

Asked about the authenticity of the quotes, Lindsay Walters, a White House spokeswoman, did not dispute them.

“The Canadian and American negotiators continue to work on reaching a win-win deal that benefits both countries,” Ms. Walters said.

Ms. Freeland said that she did believe that Mr. Lighthizer was looking for a win-win agreement, but took a long pause before answering when asked if the United States was negotiating in good faith.

At a rally in Indiana on Thursday night, Mr. Trump expressed his frustration with Canada and its dairy protections. The president accused Canada of not treating the United States fairly and said that if negotiations failed he would punish Canada with car tariffs.

“If it doesn’t happen, then we’ll put tariffs on the cars coming in from Canada, and that’ll be even better,” Mr. Trump said, complaining about the unfairness of Canadian dairy tariffs. “But I think it’s going to happen, and we’ve really developed a very good relationship.”

Negotiators have been working around the clock to hammer out their final areas of disagreement but talks have bogged down over several areas of disagreement.

Canada has insisted on protections for its publishing and broadcasting industries over concerns that these businesses would be overwhelmed by the much larger United States market. It has also resisted Mr. Trump’s requests to reform its dairy industry. Unlike the United States, which directly subsidizes farmers, Canada uses a so-called supply management system to regulate the volume of imports and keep prices stable for its farmers.

Canada has allowed foreign countries more access to its dairy market in past trade agreements, and agricultural experts said negotiators were prepared to make similar offers in the current Nafta negotiations. However, those offers have fallen short of the broad access and substantial reforms the Trump administration has called for.

The countries are also sparring over a provision of Nafta known as Chapter 19, which allows foreign countries to appeal the duties that the United States levies on them for dumping and unfair subsidies. U.S. officials confirmed that they had eliminated the provision in their agreement with Mexico, but Canadians have insisted it is necessary to protect industries including lumber from unfair rulings in the United States.

Canada, like Mexico, has also been working to find a way to get the United States to lift the tariffs that it imposed on steel and aluminum.

Successfully renegotiating Nafta would be a significant accomplishment for Mr. Trump, who has criticized the 25-year-old pact since its inception and promised to remake it on the campaign trail.

Yet the economic effects of the agreement that was reached with Mexico this week remain unclear. Trade experts who have analyzed the preliminary details have suggested that the proposals would do little to accomplish the bold claims Mr. Trump has made about how reforming Nafta would help the economy, including greatly expanding American manufacturing jobs or cutting the United States trade deficit with Mexico.

The new regulations requiring carmakers to use more domestic content and pay higher wages will most likely raise prices for consumers and could create new opportunities for automobile manufacturers in Europe and Asia to have a competitive advantage in the United States.

Nafta, which was negotiated by President George H.W. Bush and signed into law by President Clinton, helped lock together the economies of North America and led businesses to reorganize their supply chains around the continent, making industries like automakers more globally competitive.

United States trade with Canada and Mexico more than tripled in the quarter century since the deal was passed, and now many products that are imported into the United States from Mexico already contain many American materials and components.

Even so, economists generally believe the deal provided just a small boost to the American economy. And while the deal created distinct winners and losers, with some American towns suffering deeply as their factories moved to Mexico, economists say it actually had little to no effect on overall U.S. employment, as the gains and losses from the deal balanced out.

The Friday deadline was intended to allow the deal to be finalized before Mexico’s new administration takes over in December and to give Mr. Trump a win that he could promote ahead of November’s midterm elections.

But the agreement is far from final even if it is sent to Congress on Friday and is not likely to receive a final vote until next year.

Mr. Trump was scheduled to leave Washington for an event in North Carolina around midday on Friday, providing a narrow window for him to publicly celebrate an agreement with Canada at the White House.

Speaking at a university in Oshawa on Friday morning, Canadian Prime Minister Justin Trudeau said “we have also been very clear: We will only sign a deal if it is a good deal for Canada.”

Catherine Porter contributed reporting from Toronto.

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