Trump team, Canada resume talks to revamp NAFTA

Freeland told reporters as she headed in for a second day of talks with US trade negotiator Robert Lighthgizer that officials from both sides had worked on technical issues overnight.

Trump almost tore up the NAFTA pact past year after visiting farmers in Wisconsin, a major US dairy producer that Washington says has been hurt by Canadian protectionism.

"We are looking forward to constructive conversations today", Canadian Foreign Affairs Minister Chrystia Freeland told reporters as she entered a meeting with U.S. Trade Rep. Robert Lighthizer.

But Canada also will raise concerns about intellectual property rights, language governing financial services and the value of goods shipped via e-commerce sellers that can cross the border duty-free, they said.

But despite the public optimism, negotiators face a tough task ahead.

Prime Minister Justin Trudeau called Mulroney, who has been advising the Liberal government throughout the NAFTA renegotiation, on Saturday.

Trump is embarking on a high-stakes gamble, cutting a deal with Mexico first, in hopes of forcing Canada to acquiesce.

Canada and the U.S. need to present an agreed-upon text to the U.S. Congress by October 1 in order to join the deal the Trump administration has signed with Mexico.

Talks broke off last Friday and resumed Wednesday.

The Bank of Canada isn't expected to increase interest rates on Wednesday but markets will be watching for any word coming out of the resumption of NAFTA talks between Canada and the United States, said Jerusalim.

A stronger USA dollar pushed Canada's main stock market lower and hurt commodity prices in the first day of trading since the holiday weekend.

Mexican officials stressed in a joint statement that they are "continuing to promote an agreement to which Canada is a party".

"We are making good progress", she said.

"We'll walk away and not sign a bad deal for Canadians", he vowed. "We'll see, and that depends on the kinds of negotiations we have", he said.

Trump charges that the 1994 pact, which underpins US$1.2 trillion in trade between the three countries, has caused the loss of hundreds of thousands of USA jobs, a statement most economists dispute.

"If it doesn't work out that is going to be fine for our country.

It would be a giving up of our sovereignty and our identity and that is something that we will simply not accept", Trudeau said in a press conference on Tuesday."We've made it very clear that defending that cultural exemption is something fundamental to Canadians".

"We will not sign a deal that is bad for Canadians and, quite frankly, not having a Chapter 19 to ensure that the rules are followed would be bad for Canadians".

Trump has already imposed hefty tariffs on Canadian and Mexican steel and aluminum, using a section of US trade law that gives him executive authority to do that in the name of national security.

But other issues have yet to be worked out, including Canada's cultural exemption in NAFTA.

Canada keeps strict import quotas on dairy products and applies steep tariffs on products coming in that exceed the quota.

As the two sides met, new economic data showed that the USA trade deficit with Canada grew to US$3.1 billion in July.

The US business sector strongly prefers that NAFTA remain a trilateral agreement.

"Many in China must be viewing the most recent NAFTA developments, and in particular the sharp words the president is using against Canada, as another gift from the Trump administration", said Wendy Cutler, who helped lead trade negotiations with China during the Obama administration and is now at the Asia Society.

Trump boasted about taking a hard line with Canada at the negotiating table, and has since threatened to cut America's northern neighbor out of a deal if it didn't cave to his demands.

  • Eleanor Harrison