Canada was blindsided by news of the US-Mexico accord this week, but officials say they’ve made progress on key autos issue

This article is more than 2 years old

This article is more than 2 years old

Justin Trudeau said on Wednesday that it may be possible to reach a deal on Nafta ahead of Donald Trump’s Friday deadline.

“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,” the Canadian prime minister said at a press conference in northern Ontario. “No Nafta deal is better than a bad Nafta deal.”

The Canadian prime minister’s optimism was echoed later on Wednesday by Trump, who told reporters at the White House “I think Canada very much wants to make the deal”.

But, Trump warned, “it probably won’t be good at all if they don’t”.

The US and Canadian leaders’ comments came hours after trade officials resumed negotiations in Washington on US-Mexico drafted revisions, dubbed The United States-Mexico Trade Agreement by the US president. Canadian negotiators must complete that process by Friday so the revised trade pact can come into effect before Mexico’s change of government later this year.

Global stocks soar on US-Mexico trade breakthrough as Canada is sidelined Read more

Chrystia Freeland, Canada’s foreign minister, said ahead of meetings with US trade representative Robert Lighthizer on Wednesday in Washington DC that she was “optimistic” about the prospects for “productive conversations”.

Freeland, who cut short a trip to Europe to meet with US officials after Canada was blindsided by news of the US-Mexico accord earlier this week, and in particular that Mexico was prepared to go ahead with a bilateral deal, said she had already met Ildefonso Guajardo, the Mexican economy minister.

“This is going to be a full-steam ahead effort,” she said after arriving in the US capital. “We will … stand up for the Canadian national interest, and for Canadian values, while looking for areas where we can find a compromise.”

Separately, Trudeau told reporters on Tuesday that Canada would “engage in a positive and constructive way, as we always have been, and look forward to ultimately signing a deal as long as it’s good for Canada,” the Canadian prime minister said, adding “and good for middle-class Canadians”.

Trudeau added that negotiations had made progress on the key issue of cars and automotive components to the US – an area that Donald Trump identified as a Canadian pressure point for US negotiators.

“It will either be a tariff on cars, or it will be a negotiated deal,” the US president said on Monday. “And, frankly, a tariff on cars is a much easier way to go, but perhaps the other would be much better for Canada.”

Auto exports to the US are worth $56bn, or £43bn, to the Canadian economy, or around 20% of Canada’s total exports to its southern neighbor.

Other areas of dispute include Canada’s quota system for dairy products, which the US and other nations have often demanded be opened up to greater competition, changes to Nafta’s dispute settlement process known as chapter 19, and a “sunset” provision giving the deal a 16-year lifespan.

But on the US side, the Trump administration has been put on notice by the US Chamber of Commerce that Canada remains the United States’ largest export market.

“In order to do no harm to the 14 million US jobs that depend on trade with Canada and Mexico, the agreement must remain trilateral,” the body said on Monday.

The Trump administration’s trade position with Canada has also drawn criticism from Republican lawmakers, with the Pennsylvania senator Pat Toomey warning that the administration would not be able expedite congressional approval if the deal excluded Canada.

Nafta, Toomey noted, was a tri-party agreement. “The administration … must reach an agreement with Canada.”