Canadian and US negotiators express optimism as they race to agree to new terms by Trump’s Friday deadline.

Talks between Canada and the United States intensified on Thursday as the two countries push to hammer out a deal on a revamped North American Free Trade Agreement (NAFTA) by the Friday deadline imposed by US President Donald Trump.

Despite some contentious issues still on the table, the increasingly positive tone contrasted with Trump’s harsh criticism of Canada in recent weeks, raising hopes that the year-long talks will conclude soon with a trilateral agreement.

Negotiations entered a crucial phase this week after the US and Mexico announced a bilateral deal on Monday, paving the way for Canada to rejoin talks to salvage the 24-year-old accord that accounts for more than $1 trillion in annual trade.

The NAFTA deal taking shape would likely strengthen North America as a manufacturing base, provide incentives for automotive investment in the US and draw some supply chains away from China. It would slow the migration of US autos jobs to Mexico and modernise the 24-year-old pact with new chapters governing the digital economy and stronger intellectual property, labour and environmental standards.

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Trump has set a Friday deadline for the three countries to reach an agreement, which would allow Mexican President Enrique Pena Nieto to sign it before he leaves office at the end of November. Under US law, Trump must wait 90 days before signing the pact.

While negotiators are working to meet the Friday deadline, according to the Washington Post, it’s not a “drop-dead” date as Trump wouldn’t need to present a finalised deal until September 29 if he gives notice to Congress on Friday.

The US president has warned he could try to proceed with a deal with Mexico alone and levy tariffs on Canadian-made cars if Ottawa does not come on board, although making such a bilateral deal and leaving NAFTA altogether would likely meet opposition from Congress.

‘A lot of goodwill’

Negotiators worked late on Wednesday before more talks on Thursday between Canada’s lead negotiator, Foreign Minister Chrystia Freeland, and US Trade Representative Robert Lighthizer.

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“We have had very intensive work being done by officials who were meeting late into the night last night on a number of different issues and I look forward to reviewing that work with Ambassador Lighthizer,” Freeland told reporters on Thursday.

“There’s a lot of goodwill. It’s a lot that we’re trying to do in a short period of time, we’re working very very intensely,” she added.

Trump and Canadian Prime Minister Justin Trudeau expressed optimism on Wednesday about reaching an agreement by Friday, although much work remains on specific issues.

Trudeau is expected to update premiers of Canadian provinces on Thursday on the progress of the talks.

One sticking point for Canada is the US effort to scrap the Chapter 19 dispute-resolution mechanism that hinders the US from pursuing anti-dumping and anti-subsidy cases.

Lighthizer said on Monday that Mexico had agreed to eliminate the mechanism.

“I think the Canadian view on Chapter 19 is well known,” Freeland told reporters late on Wednesday after a day of talks. “This is a very intense moment in the negotiations. We’re trying to get a lot of things done really quickly. I think it will be most effective if we keep our negotiations on specific issues to the negotiating table.”

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Ottawa is also ready to make concessions on Canada’s protected dairy market in a bid to save the dispute-settlement system, the Globe and Mail reported on Tuesday. The dairy sector has repeatedly attracted Trump’s fury.

That compromise is likely to upset Canadian dairy farmers, who have an outsized influence in Canadian politics, with their concentration in the vote-rich provinces of Ontario and Quebec.

“Ultimately, we’ve got huge issues that are still to be resolved,” said Jerry Dias, head of Canada’s influential Unifor labour union. “Either we’re going to be trading partners or we’re going to fight.”