WASHINGTON—Canada, the U.S. and Mexico might be able to make an agreement on trade by the U.S. deadline of Friday, Prime Minister Justin Trudeau and President Donald Trump both said on Wednesday in their most optimistic comments to date about the year-old negotiations.

“We gave till Friday and I think we’re probably on track,” Trump said at the White House.

“We recognize that there is a possibility of getting there by Friday. But it is only a possibility, because it will hinge on whether or not there is ultimately a good deal for Canada, a good deal for Canadians,” Trudeau said in northern Ontario.

Neither leader had previously suggested a deal could be imminent. The eruption of positivity came just two days after Trump announced a preliminary deal with Mexico alone and threatened to leave Canada out.

A Canadian government official said the resolution of the negotiations would likely “come down to a trade”: Canada would give the U.S. some more access to its tightly protected dairy market, while the U.S. would agree to preserve NAFTA’s current exemption for cultural industries and the current “Chapter 19” system for resolving certain tariff disputes.

“They’re talking very tough on Chapter 19. And that, they know, is a red line for us,” said the official. “So at a certain point they’re going to have the same discussion internally — about 19 and the cultural exception as well, and decide whether they want to swallow hard and make a deal — that we’re going to have with dairy.”

Trump said Wednesday afternoon that the talks were “going really well.” He revealed that Canadian officials had visited the White House on Tuesday night.

“I think Canada very much wants to make the deal and I think it’s going to be obviously very good for Canada if they do, and I think it’s probably not going to be good at all if they don’t,” he said in the Oval Office.

Trudeau, who was in Kapuskasing, said he understood “that the Americans and the Mexicans very much want to try and get things done by Friday. We’re seeing if we can get to the right place by Friday. But as I’ve said all along, it has to be the right deal for Canada and that’s what we’re staying firm on.”

In another hint of progress, Trudeau scheduled a call with provincial premiers on Thursday to discuss the state of the negotiations.

Any NAFTA deal would soothe investors, businesspeople and citizens worried about Trump’s frequent threats to terminate the 24-year-old North American Free Trade Agreement. But the precise details on how the three countries plan to change the rules that govern dozens of industries and more than $1 trillion in annual trade might not be released immediately.

The deal would not come into force until it was ratified by the legislatures of all three countries, including both chambers of the U.S. Congress. Congressional approval could take years and it is no sure thing. Members of both parties have slammed parts of the preliminary U.S.-Mexico deal.

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The Canadian official, who spoke on condition of anonymity to discuss the sensitive negotiations, said a deal would retain Canada’s system of dairy supply management, which shields dairy farmers from foreign competition through a system of quotas and tariffs, but make incremental tweaks to satisfy the U.S. In negotiations on the Trans-Pacific Partnership trade agreement, Canada agreed to open up 3.25 per cent of the domestic dairy market.

Trudeau has vowed again this week to defend supply management, but he has not ruled out making concessions within the system.

“There are a lot of options that involve access and quota, and all the instruments we can use to give the Americans what they want,” the official said.

Trump has repeatedly complained to Trudeau about Canada’s dairy tariffs. Trudeau faces political pressure, in Quebec in particular, to give no ground. The province is in the middle of an election campaign and all of the major party leaders are urging him to stand firm.

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“We are opposed — not just my party, but the majority of the Quebec population — are opposed to concessions on supply management. If there are some who think they can go around Quebec … there will be serious political consequences,” Liberal Leader and Premier Philippe Couillard said Wednesday, the Montreal Gazette reported.

The Canadian official said a dairy concession from Trudeau would require the U.S. to make two commitments.

First, the U.S. would agree to keep the NAFTA “Chapter 19” system, which allows companies to appeal anti-dumping and countervailing tariffs, such as those on softwood lumber, to an independent panel composed of people from the two countries involved, rather than in the domestic courts of the tariff-imposing country.

Second, the U.S. would continue to allow cultural industries to be exempt from the agreement. NAFTA’s cultural exemption allows the Canadian government to maintain a variety of rules and subsidies designed to support Canadian content. Such interventions would not normally be allowed under a free-trade regime.

Trump threatened Monday to do a deal with Mexico alone if Canada does not make concessions, prompting a debate in the U.S. Congress and elsewhere about whether he would have the legal power to abandon Canada after notifying Congress about a negotiation that involved Canada.

Members of Congress, including senior Republicans, have pushed back, saying they want Canada involved. So has the U.S. business lobby, including the U.S. Chamber of Commerce. And the Canadian official said “people have gotten lost in a procedural argument.” There is no doubt, the official said, that Canada will be part of the final agreement.

Foreign Affairs Minister Chrystia Freeland held two meetings Wednesday with her U.S. counterpart, U.S. Trade Representative Robert Lighthizer.

She said she was “encouraged” and “optimistic” upon her departure from the morning meeting but she did not provide details. After the evening meeting, she said some Canadian and U.S. officials might work through the night.

The negotiations unfolded as the Trump administration suffered a trade defeat to Canada on a separate matter. The U.S. International Trade Commission ruled 5-0 to overturn Trump’s tariffs on Canadian newsprint, finding that Canadian imports are not causing significant harm to U.S. producers.

The tariffs, imposed at the request of one U.S. company that owns a paper mill, had raised costs to struggling American newspapers, some of which laid off employees as a result.

According to U.S. officials, the preliminary deal between the U.S. and Mexico includes a 16-year expiration date on a new trade agreement. After six years, though, the countries could decide to renew the agreement for an additional 16 years.

Trudeau has previously said he could not sign a deal that has an expiry date on it, but that was when the U.S. was proposing a five-year termination date. The Canadian official said Wednesday that they were still seeking to precisely understand what the U.S. and Mexico are proposing, but they do not currently see the modified kind of sunset provision as a deal-breaker.

“The first read is that it means very little and that it’s basically a glorified review clause, which of course is something we can live with,” the official said.

The three countries want to come to an agreement by Friday so they can start the mandatory 90-day waiting period in time for outgoing Mexican President Enrique Pena Nieto to sign the final agreement. His left-wing successor, Andres Manuel Lopez Obrador, takes office at the beginning of December and is seen as more unpredictable.

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