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| Canada and U.S. Meet as Pressure Builds to Reach Trade Accord | Canada and U.S. Meet as Pressure Builds to Reach Trade Accord |
| (35 minutes later) | |
| The United States and Canada are moving closer to resolving their trade differences and could reach a deal by the end of the week that keeps the three-country North American Free Trade Agreement intact. | The United States and Canada are moving closer to resolving their trade differences and could reach a deal by the end of the week that keeps the three-country North American Free Trade Agreement intact. |
| Both countries are under pressure to find a way to keep Nafta intact and to avoid the United States and Mexico from moving ahead without Canada, as President Trump has threatened. Republican lawmakers are warning the White House that a bilateral agreement will not pass congressional muster, while industry groups said a Nafta without Canada would take a significant economic toll. | Both countries are under pressure to find a way to keep Nafta intact and to avoid the United States and Mexico from moving ahead without Canada, as President Trump has threatened. Republican lawmakers are warning the White House that a bilateral agreement will not pass congressional muster, while industry groups said a Nafta without Canada would take a significant economic toll. |
| In an appearance in front of reporters in the Oval Office on Wednesday, Mr. Trump said that he was optimistic that the Canadians would soon become a part of an expanded deal made earlier in the week with Mexico. | In an appearance in front of reporters in the Oval Office on Wednesday, Mr. Trump said that he was optimistic that the Canadians would soon become a part of an expanded deal made earlier in the week with Mexico. |
| “Right now we call it the U.S.-Mexico trade agreement and we’ll see whether or not Canada get its into it,” the president said. “I think it’s probably not going to be good at all if they don’t.” | “Right now we call it the U.S.-Mexico trade agreement and we’ll see whether or not Canada get its into it,” the president said. “I think it’s probably not going to be good at all if they don’t.” |
| In what he said was a hint to the country’s willingness to join into new trade deal, Mr. Trump said he’d spoken to Justin Trudeau, the prime minister of Canada, by phone the night before. “Hey, he called me,” the president said. “I didn’t call him.” | In what he said was a hint to the country’s willingness to join into new trade deal, Mr. Trump said he’d spoken to Justin Trudeau, the prime minister of Canada, by phone the night before. “Hey, he called me,” the president said. “I didn’t call him.” |
| On Wednesday, Chrystia Freeland, Canada’s foreign minister, expressed optimism that the talks were moving in a positive direction and said that Canadian and American officials were working intensely to try and resolve remaining differences. | On Wednesday, Chrystia Freeland, Canada’s foreign minister, expressed optimism that the talks were moving in a positive direction and said that Canadian and American officials were working intensely to try and resolve remaining differences. |
| “Mexico has made some significant concessions which will be really good for Canadian workers,” Ms. Freeland told reporters outside the office of the United States trade representative. “On that basis, we are optimistic about having some really good productive conversations this week.” | “Mexico has made some significant concessions which will be really good for Canadian workers,” Ms. Freeland told reporters outside the office of the United States trade representative. “On that basis, we are optimistic about having some really good productive conversations this week.” |
| Asked if the negotiations were nearing completion, Ms. Freeland said: “You’re tempting me to say something Churchillian — is this the end of the beginning, is this the beginning of the end? Let me just say a lot has been accomplished.” | Asked if the negotiations were nearing completion, Ms. Freeland said: “You’re tempting me to say something Churchillian — is this the end of the beginning, is this the beginning of the end? Let me just say a lot has been accomplished.” |
| The agreement appears to be giving the United States much of what it has been demanding over the past year, particularly related to automobiles. Mexican officials have essentially agreed to limit imports of cars and car parts into the United States by accepting a deal that would impose punitive tariffs of up to 25 percent on imports that exceed a certain threshold, according to officials. | The agreement appears to be giving the United States much of what it has been demanding over the past year, particularly related to automobiles. Mexican officials have essentially agreed to limit imports of cars and car parts into the United States by accepting a deal that would impose punitive tariffs of up to 25 percent on imports that exceed a certain threshold, according to officials. |
| Mexican exports of cars and sport utility vehicles in excess of 2.4 million could be subject to the auto tariffs that Mr. Trump has threatened to impose as a matter of national security. The deal would also impose tariffs on Mexican exports of auto parts that exceed $90 billion. Both figures are higher than Mexico’s shipments to the United States last year, giving Mexico some ability to boost its exports. The quotas would apply to all Mexican cars and car parts. | Mexican exports of cars and sport utility vehicles in excess of 2.4 million could be subject to the auto tariffs that Mr. Trump has threatened to impose as a matter of national security. The deal would also impose tariffs on Mexican exports of auto parts that exceed $90 billion. Both figures are higher than Mexico’s shipments to the United States last year, giving Mexico some ability to boost its exports. The quotas would apply to all Mexican cars and car parts. |
| Mexican officials insisted on Wednesday that the pact would offer their industry important protection from the threat of Mr. Trump’s auto tariffs by carving out an exemption for a large volume of autos and car parts. | Mexican officials insisted on Wednesday that the pact would offer their industry important protection from the threat of Mr. Trump’s auto tariffs by carving out an exemption for a large volume of autos and car parts. |
| Ildefonso Guajardo, the Mexican economy secretary, described the auto provisions as a win for Mexican carmakers, saying that around 70 percent of Mexican automotive exports will qualify for free trade under Nafta and that the side agreement would help ensure that any impact from Mr. Trump’s proposed auto tariffs would be limited. | Ildefonso Guajardo, the Mexican economy secretary, described the auto provisions as a win for Mexican carmakers, saying that around 70 percent of Mexican automotive exports will qualify for free trade under Nafta and that the side agreement would help ensure that any impact from Mr. Trump’s proposed auto tariffs would be limited. |
| “It respects our existing capacity, it respects the new plants that are being developed, and it provides room for growth,” Mr. Guajardo said. | “It respects our existing capacity, it respects the new plants that are being developed, and it provides room for growth,” Mr. Guajardo said. |
| But auto industry executives said such an agreement could ultimately limit the number of imports from Mexico, push production outside of North America and raise prices for vehicles. | But auto industry executives said such an agreement could ultimately limit the number of imports from Mexico, push production outside of North America and raise prices for vehicles. |
| “If we run up against these quotas, we are going to make manufacturing more expensive in the United States. Period,” said Ann Wilson, senior vice president of government affairs of the Motor & Equipment Manufacturers Association. | “If we run up against these quotas, we are going to make manufacturing more expensive in the United States. Period,” said Ann Wilson, senior vice president of government affairs of the Motor & Equipment Manufacturers Association. |
| Ms. Freeland has called Mexico’s concessions on cars “significant,” indicating that Canada is comfortable with the agreement the United States has reached. She met with Mexican officials to discuss the trade agreement they reached with the United States late Tuesday and described those talks as productive. | |
| The intense negotiations come as relations between Canada and the United States have declined to their lowest point in recent memory. In June, Mr. Trump berated Canadian Prime Minister Justin Trudeau as “very dishonest and weak” following a contentious G7 summit. Later that month, Ms. Freeland angered some in the White House when she suggested in a speech that the United States under the Trump administration was turning its back on the democratic values that it once championed. | The intense negotiations come as relations between Canada and the United States have declined to their lowest point in recent memory. In June, Mr. Trump berated Canadian Prime Minister Justin Trudeau as “very dishonest and weak” following a contentious G7 summit. Later that month, Ms. Freeland angered some in the White House when she suggested in a speech that the United States under the Trump administration was turning its back on the democratic values that it once championed. |
| But the Trump administration may be more willing to strike a deal with Canada given blowback from Congress — which has the ultimate legal authority over trade agreements — over the potential for a Nafta that includes just Mexico. | But the Trump administration may be more willing to strike a deal with Canada given blowback from Congress — which has the ultimate legal authority over trade agreements — over the potential for a Nafta that includes just Mexico. |
| White House officials have been attempting to sell the agreement it reached with Mexico as one that Canada cannot refuse, but several issues still remain to be worked out between the United States and its Northern neighbor — including Canada’s dairy tariffs and a legal framework for settling trade disputes. | White House officials have been attempting to sell the agreement it reached with Mexico as one that Canada cannot refuse, but several issues still remain to be worked out between the United States and its Northern neighbor — including Canada’s dairy tariffs and a legal framework for settling trade disputes. |
| “We’re extremely hopeful that Canada will join,” Kevin Hassett, chairman of the White House Council of Economic Advisers, said on Fox Business Network. “It’s a great deal. It’s really an historic deal that the president has designed with Mexico. And so they should be up for it.” | “We’re extremely hopeful that Canada will join,” Kevin Hassett, chairman of the White House Council of Economic Advisers, said on Fox Business Network. “It’s a great deal. It’s really an historic deal that the president has designed with Mexico. And so they should be up for it.” |
| Pressing ahead with a bilateral agreement could tip the economic rules governing the North American economy into a mess of uncertainty. | Pressing ahead with a bilateral agreement could tip the economic rules governing the North American economy into a mess of uncertainty. |
| Legal experts remain divided about what would happen to the United States-Canada trading relationship if they are no longer knit together through Nafta. Relations between Canada and Mexico would likely be governed by the Trans-Pacific Partnership, which the countries are likely to approve early next year. But that pact excludes the United States and the relationship could wind up reverting to the rules of an earlier United States-Canada Free Trade Agreement. | Legal experts remain divided about what would happen to the United States-Canada trading relationship if they are no longer knit together through Nafta. Relations between Canada and Mexico would likely be governed by the Trans-Pacific Partnership, which the countries are likely to approve early next year. But that pact excludes the United States and the relationship could wind up reverting to the rules of an earlier United States-Canada Free Trade Agreement. |
| Also unclear is whether the United States can move forward with a bilateral deal with Mexico without terminating Nafta and restarting the process of notifying Congress about the administration’s intentions. | Also unclear is whether the United States can move forward with a bilateral deal with Mexico without terminating Nafta and restarting the process of notifying Congress about the administration’s intentions. |
| White House officials have said publicly that they think that a bilateral deal with Mexico can be done if Canada declines to participate, but privately they have expressed doubts about the legal implications of casting Canada aside. | White House officials have said publicly that they think that a bilateral deal with Mexico can be done if Canada declines to participate, but privately they have expressed doubts about the legal implications of casting Canada aside. |
| The administration has received Congress’ approval to renegotiate Nafta under so-called “fast-track” authority, which creates a streamlined process for passing the trade agreement into law. But some Republicans have been skeptical whether an agreement that shuts out Canada meets the terms of that agreement. | The administration has received Congress’ approval to renegotiate Nafta under so-called “fast-track” authority, which creates a streamlined process for passing the trade agreement into law. But some Republicans have been skeptical whether an agreement that shuts out Canada meets the terms of that agreement. |
| “To use Trade Promotion Authority’s ‘fast-track’ procedures, the administration must also reach an agreement with Canada,” Senator Patrick J. Toomey, a Pennsylvania Republican, said in a statement. “Nafta was a tri-party agreement only made operative with legislation enacted by Congress. Any change, such as Nafta’s termination, would require additional legislation from Congress.” | “To use Trade Promotion Authority’s ‘fast-track’ procedures, the administration must also reach an agreement with Canada,” Senator Patrick J. Toomey, a Pennsylvania Republican, said in a statement. “Nafta was a tri-party agreement only made operative with legislation enacted by Congress. Any change, such as Nafta’s termination, would require additional legislation from Congress.” |
| Because of these limitations, many Canadians have interpreted Mr. Trump’s threats to move ahead with a bilateral deal without them as bluster. | Because of these limitations, many Canadians have interpreted Mr. Trump’s threats to move ahead with a bilateral deal without them as bluster. |
| “It’s rhetoric,” said Debra Steger, a law professor at the University of Ottawa who is a former senior trade negotiator for Canada and a onetime official at the World Trade Organization. “It’s just a negotiating tactic that sounds good if you don’t understand the law and the rules.” | “It’s rhetoric,” said Debra Steger, a law professor at the University of Ottawa who is a former senior trade negotiator for Canada and a onetime official at the World Trade Organization. “It’s just a negotiating tactic that sounds good if you don’t understand the law and the rules.” |
| “From my perspective it’s not clear to me how the administration comes and says that a bilateral agreement with Mexico was properly notified to the Congress,” said Jennifer Hillman, a professor at Georgetown Law Center. | “From my perspective it’s not clear to me how the administration comes and says that a bilateral agreement with Mexico was properly notified to the Congress,” said Jennifer Hillman, a professor at Georgetown Law Center. |
| However, she conceded, that point probably doesn’t matter unless members of Congress are willing to fight the administration. Although members of Congress have objected loudly to the president’s past trade policies, they have not yet rallied behind legislation that would actually stay his hand on trade. With midterm elections approach, Republicans have been wary of speaking out too much against the president. | However, she conceded, that point probably doesn’t matter unless members of Congress are willing to fight the administration. Although members of Congress have objected loudly to the president’s past trade policies, they have not yet rallied behind legislation that would actually stay his hand on trade. With midterm elections approach, Republicans have been wary of speaking out too much against the president. |
| The Trump administration seems prepared to test Congress, if the United States and Canada cannot come to an agreement. Mr. Lighthizer insisted on Monday that a deal with Mexico would still meet Congress’ prerequisites. | The Trump administration seems prepared to test Congress, if the United States and Canada cannot come to an agreement. Mr. Lighthizer insisted on Monday that a deal with Mexico would still meet Congress’ prerequisites. |
| “Ideally we’ll have the Canadians involved. If we don’t have the Canada involved, we will notify that we have a bilateral agreement that Canada is welcome to join,” he said, referring to the process of notifying Congress of their intent to sign a deal. “We think that satisfies our requirements, the requirements of the statute.” | “Ideally we’ll have the Canadians involved. If we don’t have the Canada involved, we will notify that we have a bilateral agreement that Canada is welcome to join,” he said, referring to the process of notifying Congress of their intent to sign a deal. “We think that satisfies our requirements, the requirements of the statute.” |
| Some legal experts argue that the Trump administration has several weeks yet to finalize a deal. The White House needs to notify Congress of its intent to sign a trade deal by the end of August in order for the deal to be signed before the current Mexican administration leaves office December 1. | Some legal experts argue that the Trump administration has several weeks yet to finalize a deal. The White House needs to notify Congress of its intent to sign a trade deal by the end of August in order for the deal to be signed before the current Mexican administration leaves office December 1. |
| But some lawyers say the language of that notification can be vague, and the administration has another 30 days before it must present the actual text of the trade agreement to Congress. | But some lawyers say the language of that notification can be vague, and the administration has another 30 days before it must present the actual text of the trade agreement to Congress. |
| The question now, said Jeffrey J. Schott, a senior fellow at the Peterson Institute for International Economics, is whether the countries “can come close enough to a deal with Canada that they can include Canada in the notification and work out a deal in the next couple weeks.” | The question now, said Jeffrey J. Schott, a senior fellow at the Peterson Institute for International Economics, is whether the countries “can come close enough to a deal with Canada that they can include Canada in the notification and work out a deal in the next couple weeks.” |
| Even with Canada on board, however, a revised Nafta deal could face a long road to approval in Congress. | Even with Canada on board, however, a revised Nafta deal could face a long road to approval in Congress. |
| Democrats have long criticized Nafta for sending American jobs abroad, and they have pushed Mr. Trump to include tougher protections for workers in the deal. Republicans have been critical of some of the administration’s proposals they see as disadvantaging business, including the sunset clause and limitations to companies’ ability to sue foreign governments. | Democrats have long criticized Nafta for sending American jobs abroad, and they have pushed Mr. Trump to include tougher protections for workers in the deal. Republicans have been critical of some of the administration’s proposals they see as disadvantaging business, including the sunset clause and limitations to companies’ ability to sue foreign governments. |
| Many members of Congress also seem likely to stand up for Canada’s inclusion. Canada is the largest export destination for 36 states. | Many members of Congress also seem likely to stand up for Canada’s inclusion. Canada is the largest export destination for 36 states. |
| On Tuesday, Kansas Senator Jerry Moran, a Republican, sent a letter to Mr. Trump saying that Canada must be included in any revised Nafta. | On Tuesday, Kansas Senator Jerry Moran, a Republican, sent a letter to Mr. Trump saying that Canada must be included in any revised Nafta. |
| “Any new agreement that excludes Canada would unfortunately be a significant step in the wrong direction compared to the trilateral agreement in place today,” he wrote. | “Any new agreement that excludes Canada would unfortunately be a significant step in the wrong direction compared to the trilateral agreement in place today,” he wrote. |