Canada's race against time with US to reach NAFTA deal

CANADA - 30 September 2018: Will Canada and the United States thaw their unprecedented diplomatic chill and reach a deal to revamp the North American Free Trade Agreement by a US-imposed Sunday deadline? Ottawa is certainly working hard on it.

Foreign Minister Chrystia Freeland, Canada's chief NAFTA negotiator, opted to push back her planned Saturday speech before the UN General Assembly until Monday so she could concentrate on trade matters.

Those talks are now in a crucial phase. Negotiators are racing against the clock because of a US-set deadline.

The United States and Mexico want to push their deal through their respective legislatures before Mexican President-elect Andres Manuel Lopez Obrador takes office on December 1.

In the United States, Congress must have the text of the deal by Sunday if a 60-day review period is to be respected.

In a surprise twist, Mexican Economy Minister Ildefonso Guajardo said Friday that Washington and Ottawa had told him they could reach a compromise on an updated trilateral agreement within "48 hours."

"For the first time, we're seeing a real effort by both sides," Guajardo added.

US and Canadian negotiators were expected to work all weekend via secure video link, The Globe and Mail newspaper reported Saturday, citing sources in Prime Minister Justin Trudeau's administration and on the US industry side.

- Tough talks -

US President Donald Trump has been pushing for a complete overhaul of the 25-year-old continental trade deal, which he says has been a "rip-off" for the United States.

In August -- more than a year into the negotiations -- the United States and Mexico announced they had reached a two-way deal, after breaking away for bilateral talks on their outstanding issues.

But the ensuing talks to incorporate Canada have stumbled.

According to the negotiators, Canada's insistence on a trade dispute provision and its protected dairy sector are the last major sticking points.

Ottawa is also seeking assurances that the United States will not, after signing a new NAFTA deal, turn around and hit Canada with punitive auto tariffs.

Tempers flared this week on both sides as the end-of-month deadline approached.

"We're not getting along with their negotiators," Trump said Wednesday of Canada.

Trudeau fired back: "We won't sign a bad deal for Canada."

- 'Significant concessions' -

But on Saturday, The Globe and Mail reported progress, citing industry and government sources saying that Canada had made "significant concessions" on the dairy issue in order to make a deal possible.

One US industry source in contact with US negotiators told the Canadian paper that Washington was "serious" about enforcing the Sunday deadline, having repeatedly missed other cut-off dates during the tortuous negotiations.

If no deal is made, US tariffs on Canada's auto sector -- one of its largest industrial sectors -- could quickly be put in place, the same source said, though a Canadian official insisted that Washington had made no new threats on tariffs.

Trudeau met in recent days with Lopez Obrador, who promised not to turn his back on Canada, while also saying he was happy with the deal he had reached with Washington.

The politics are high-stakes on both sides of the US-Canadian border.

Trump needs to look strong heading into the November midterm elections, while Trudeau does not want to be seen as caving before next year's general election.