U.S.-Canada NAFTA trade talks break off without a deal

Trade talks between the U.S. and Canada broke off on Friday without reaching a deal, but representatives are expected to resume discussions next week. 

President Trump told Congress he expects to sign a trade pact with Mexico and possibly Canada in 90 days, according to a statement from U.S. trade representative Robert Lighthizer. 

"We have also been negotiating with Canada throughout this year-long process," Lighthizer said in the statement. "This week those meetings continued at all levels. The talks were constructive, and we made progress. Our officials are continuing to work toward agreement."

Trump trade officials will negotiate with Canada's foreign minister, Chrystia Freeland, on Wednesday, he added.  

The administration earlier this week gave Canada until Friday to make concessions, vowing to move forward with a bilateral trade pact with only Mexico. The U.S. and Mexico earlier this week reached a preliminary outline for a new trade agreement, part of its bid to renegotiate the North American Free Trade Agreement. 

Although Mr. Trump had signaled his belief that Canada would make concessions, telling Bloomberg News on Thursday that he believed the country has "no choice" but to make a deal, the latest development suggests the Trump administration is eager to reach agreement and preserve the trade pact.  

"Not just any deal"

In a press conference on Friday afternoon, Freeland said, "Canada will only sign a deal which is a good deal for Canada."

She added, "The prime minister has said on a number of occasions that we want a good deal, not just any deal ... a good deal is one which reflects the Canadian national interest."

NAFTA negotiations, which kicked off a year ago, have recently focused on agricultural issues, including the dairy industry. Mr. Trump has complained about Canada's dairy regulations, calling them protectionist and saying they harm U.S. dairy farmers. 

Freeland said one area where the countries made progress is in so-called "rules of origin" for automobiles, which govern how much of a car must be made within the NAFTA countries to avoid tariffs. 

Currently, any car sold in North America that includes 62 percent of parts made within the region are exempt. The Trump administration wants to boost that threshold to 75 percent so that more parts would be made in the U.S.

"The most important progress over the summer were in the rules of origin in the car sector," Freeland said. "That has now put us in a place where we can move on to the other issues. And the rules of origin agreement that was achieved, I think, has particular value for my government." 

Canada's leverage

Some economists have noted that Canada has more leverage in the talks than its size would suggest, partly because it's one of the most important U.S. trading partners.

"Despite the Canadian economy's small size relative to the U.S., we think Canada holds several key playing cards in these trade talks, not least because it is among the most important U.S. trading partners," wrote Oren Klachkin, lead economist at Oxford Economics, in a report. 

Earlier on Friday, Mr. Trump complained about leaked comments he had made off the record during the Bloomberg interview. He reportedly predicted that Canada would agree to a deal "totally on our terms," according to the Toronto Star. 

He reportedly added, "Here's the problem. If I say no — the answer's no. If I say no, then you're going to put that, and it's going to be so insulting they're not going to be able to make a deal ... I can't kill these people," referring to the Canadian government. 

Mr. Trump appeared to confirm the comments in a tweet: "At least Canada knows where I stand!"

In:
• North American Free Trade Agreement
• Donald Trump