Big Questions Remain On Whether Canada Will Agree To Tentative Trade Deal

Aug 28, 2018
Originally published on August 29, 2018 5:15 pm
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Canada will need to join the new version of the North American Free Trade Agreement if the trade pact is to survive. Today Canada's top trade negotiator rejoined talks in Washington. Yesterday the U.S. and Mexico announced they had reached a tentative deal. NPR's John Ydstie has more.

JOHN YDSTIE, BYLINE: The U.S. reached an agreement with Mexico first partly because progress on the deal with Canada was slow. But White House trade adviser Peter Navarro said on Morning Edition this morning the administration wants Canada to sign on.


PETER NAVARRO: We're engaging immediately with Canada. We'd love to have them in. Let's see what happens.

YDSTIE: What the administration really wants is for Canada to sign up right away - by Thursday of this week. That would preserve the three-way NAFTA framework and give Congress 90 days to review the deal as required by law. And that would allow the deal to be completed before December 1, when a new government takes power in Mexico. But President Trump didn't express much love for Canada as he took a harder line in his comments yesterday. Trump suggested the U.S. might rip up NAFTA and negotiate a separate deal with its northern neighbor or simply slap a tariff on cars imported from Canada.


PRESIDENT DONALD TRUMP: One way or the other, we have a deal with Canada. It'll either be a tariff on cars, or it will be a negotiated deal. And frankly, a tariff on cars is a much easier way to go.

YDSTIE: Matt Gold, a former deputy U.S. trade representative, says Trump's threats are not likely to produce a quick deal with Canada.

MATT GOLD: Sovereign governments don't let themselves get bullied the way weak parties in commercial transactions do.

YDSTIE: Despite Trump's threats and bluster, Gold says the deal negotiated with Mexico very much follows the NAFTA framework that Trump has vilified.

GOLD: What Trump is working on right now is NAFTA with a large number of very small revisions, not the major revisions that he wanted initially.

YDSTIE: The administration did achieve some things. There will be a higher percentage of North American-made parts in cars that move tariff-free across borders. That change is designed to reduce the number of foreign parts used in Mexican car plants. The deal would also boost wages for Mexican autoworkers, which could help preserve U.S. factory jobs. Gold says it's possible Canada would support most of what is in the tentative Mexico-U.S. agreement. But he says there are important things those two countries didn't discuss that are obstacles to a deal with Canada. At the top of the list - Canada's very high tariffs on imported dairy, poultry and eggs that President Trump has railed against.

GOLD: The president made some loud and boisterous speeches in American dairy country suggesting that the Canadians were being abusive of the United States with respect to those tariffs. And what he did is he got the Canadians' backs up on that issue.

YDSTIE: Ironically, Canada was ready to give up those tariffs in the Trans-Pacific Partnership deal that President Trump walked away from, according to Gold, but that changed when Trump amped up his rhetoric. Christopher Wilson, of the Mexico Institute at the Wilson Center, a nonpartisan policy forum, says the key question is whether the Mexico-U.S. trade deal without Canada might be a step backward.

CHRISTOPHER WILSON: A U.S.-Mexico trade agreement with the provisions that were laid out yesterday by the government is just not as good as the trilateral deal that we have right now.

YDSTIE: Since President Ronald Reagan campaigned on creating a free trade zone to boost economic growth across North America, U.S. presidents have differed on the details of how to accomplish that. But until now, none has suggested you could simply leave Canada out. John Ydstie, NPR News, Washington.

[POST-BROADCAST CORRECTION: In this report, Matthew Gold is referred to as a former deputy U.S. trade representative. In fact, he is a former deputy assistant U.S. trade representative. We also report that Gold said that during the Trans-Pacific Partnership negotiations, Canada was ready to remove tariffs on poultry, dairy and egg products coming from the U.S. In fact, Gold said Canadian officials "did agree to lower their special tariffs" but not to completely eliminate them.] Transcript provided by NPR, Copyright NPR.