OTTAWA—Canada’s lead NAFTA negotiator doesn’t expect the United States to make demands for the dairy sector during the third round of talks this week, and said American officials still haven’t proposed changes to some of the thorniest issues of the agreement, including on car manufacturing and dispute resolution mechanisms.

Steve Verheul, chief trade negotiator with Global Affairs, said there is still “plenty to work with for the time being” but stopped short of expressing confidence that the shared goal of a new deal by the end of the year can be met.

“We’ll make good progress for the next few rounds, I think. But the endgame is always the hardest part, and impossible to predict,” he told reporters Sunday afternoon, as Ottawa hosted the third round of talks on the 23-year-old trade deal between Canada, the U.S. and Mexico.

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“As in any negotiation, there are moments when things get a little heated, but for the most part, I’d say it’s quite constructive,” Verheul said. “We’re making good, solid progress.”

The U.S. government signalled this week that one of its top priorities in the agreement is to increase the rules-of-origin for auto parts — essentially pushing to get more American content in the components of cars made in North America. U.S. President Donald Trump has also criticized Canada’s supply management system that protects its domestic dairy industry, which Ottawa has vowed to support, while the American government stated this summer that one of its goals is to ditch the Chapter 19 dispute panel from NAFTA.

Yet so far, U.S. negotiators have not made specific demands in those areas at the negotiating table, Verheul said.

“We have made a detailed proposal on Chapter 19; we have not seen a U.S. proposal,” Verheul said. One of Canada’s priorities is to preserve that chapter, which dictates how disputes between the trading partners are resolved.

Verheul added that of the 28 negotiating groups working on areas of the agreement, there are a “couple” that could be resolved before the third round of negotiations wraps up on Wednesday, but he would not specify which ones.

As NAFTA is being renegotiated, the director of operations at a Canadian thermoplastics plant in Mexico considers what the trade deal could mean for the manufacturing business. Take a tour of the Exo-s factory in San Juan Del Rio. (The Canadian Press)

The lack of specificity from the U.S. in key areas for Canada had union leaders on the sidelines of the talks accusing the Americans of not taking the renegotiations seriously. For the second day in a row, Jerry Dias, the president of Unifor, Canada’s largest private sector union, predicted the talks would fall apart in the coming weeks, with Canada and Mexico walking away from an intransigent American administration.

“It looks as if the tactics (for the U.S.) are: We’re the big player and we’re going to force the agenda and if you don’t like it, too bad. So my guess is that everybody walks away,” Dias said.

“You can go through the charade and see how this thing unfolds, and I believe everybody has to do that, but I’m not expecting anything meaningful by any stretch of the imagination.

“This is a political discussion, not an economic discussion.”

Christopher Monette, director of public affairs for Teamsters Canada, called on the U.S. to engage more seriously with Ottawa’s proposals to bring tougher labour standards into the 23-year-old trade deal.

“The Canadian government is not kidding around in terms of their labour proposals. This is strong stuff that our union both in Canada and the United States strongly supports. We think this needs to be taken more seriously by American negotiators,” Monette said.

Trump has repeatedly threatened to drop out of NAFTA, citing concern about American trade deficits and the loss of manufacturing jobs in his country. Trump has also predicted the renegotiation will fail to produce a new deal, while officials from Canada and Mexico have stated that it is still early in the process that continues in Ottawa until Wednesday, before returning to the U.S. for a scheduled fourth round of talks.

“We’re just starting,” Kenneth Smith Ramos, the lead Mexican negotiator, told reporters here on Saturday.

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The agenda for the third round of negotiations, which was obtained by the Star this week, showed that negotiators were scheduled to talk about customs, digital trade, the environment, government procurement, state-owned enterprises and other issues on Sunday.

Key points surrounding the Ottawa round of negotiations include the American demand to change NAFTA’s rules-of-origin component, which dictates how much of certain products must be made in North America to qualify for free trade under the deal. The U.S. has signalled that it wants more American-made content in auto parts, though it has yet to say exactly by how much.

The current North American content rules for auto parts under NAFTA is 62.5 per cent.

Dias, whose union represents autoworkers in Canada, said Sunday that he’s not against raising rules-of-origin in that industry, but cautioned that doing so without bringing tougher labour standards into a new NAFTA could simply mean more manufacturing jobs leave Canada for lower-wage jurisdictions in the U.S. and Mexico.

“There won’t be a trade deal unless Mexico takes Canada’s proposals on elevating the standard of living for Mexican workers in a very serious way,” he said.

He added that despite his doomsaying on the prospects of the renegotiation, he has faith in Canada’s negotiating team and said he’s more hopeful that a deal can be reached sometime next spring, once the U.S. begins to put proposals on the table and is willing to compromise with its NAFTA partners ahead of elections in Mexico and the U.S. next year.

“Ultimately, the U.S. business community is going to need what Canada has to offer. We’re in a very good position, so we should make sure that we carve a deal that’s in the best interest of Canadians,” Dias said.

Canada’s Liberal government has proposed bringing labour and environmental agreements between the three countries, which are currently side deals to NAFTA, into the main body of the accord. Ottawa has also called for an updated NAFTA to be a “progressive” deal with chapters on Indigenous Peoples and gender rights, while reserving the right to pass regulations “in the public interest.”

That last bit is why Rob Cunningham, a lawyer for the Canadian Cancer Society, was on hand Sunday to tout his demand that tobacco products be exempted from the trade deal. That would prevent cigarette companies from using NAFTA to challenge Canada’s health laws as a barrier to fair competition, he said — something that was first threatened in 1994 when Ottawa floated the idea of plain cigarette packaging.

He said Canada should push hard to drop tobacco products from the deal, to protect the government’s ability to pass health regulations for cigarettes and other tobacco goods.

“There’s a very strong case to do this exemption,” he said, pointing out that Canada, the U.S. and Mexico agreed to cut tobacco out of the now-stalled Trans Pacific Partnership agreement.

“It’s not like this is an economic protection measure. It’s an absolutely pure health measure.”

With files from Tonda MacCharles

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