NAFTA: So Close, Yet So Far

(Undated Photo) Canadian Prime Minister Justin Trudeau and President Donald Trump share a lighter moment during a state visit in March 2018. ( MGN )

(Bloomberg) -- Justin Trudeau said a planned meeting with U.S. President Donald Trump to potentially seal a Nafta deal collapsed after Mike Pence called and insisted the meeting was conditional on adding a sunset clause.

Trudeau made the revelation of the often-private talks during a press conference in Ottawa Thursday where he sharply criticized U.S. steel and aluminum tariffs and announced retaliatory tariffs of his own. He was asked what the new measures mean for North American Free Trade Agreement negotiations.

Trudeau said he had offered to “sit down around a table with the president to work out the final details of Nafta, because there was the broad lines of a decent win-win-win deal on the table that I thought required that final deal making moment,” Trudeau said. “I got a call from Vice President Pence on Tuesday in which it was impressed upon me that there was a precondition to us being able to get together -- that Canada would accept a sunset clause for Nafta.” Trudeau said he refused.

“I had to highlight that there was no possibility of any Canadian prime minister signing a Nafta deal that included a five-year sunset clause, and obviously the visit didn’t happen.”

‘Open’ to Talks

The sunset clause is one of a handful of highly controversial areas of talks -- the U.S. wants Nafta to expire after five years unless the three countries agree to extend it, a clause that Canada and Mexico say is absurd and wouldn’t offer investors long-term certainty.

The remarks indicate a Nafta deal was close enough for Trudeau to think a meeting of leaders could wrap things up, but also that Canada and the U.S. remain sharply divided on the issue of the sunset clause. Trudeau said he’s confident Mexico would never accept it either.

Nafta talks have made progress lately on the issue of auto manufacturing, another key area. Disputes remain over U.S. demands to cap the value of contracts awarded to Canadian and Mexican companies and proposals to kill or water-down certain dispute panels.

“We continue to be open to working on a renewed and modernized Nafta, and we will continue to sit down at the negotiating table,” Trudeau said.

The window to get a deal passed under this Congress -- which had been the U.S. goal -- is nearly gone. House Speaker Paul Ryan had said he needed to be notified by May 17 of intent to sign a deal, then said there might be a couple of weeks of wiggle room, placing the deadline around now. Mexican elections are also scheduled for July 1.

 

Copyright 2018, Bloomberg

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