Foreign affairs minister heads to Washington as NAFTA hangs in balance

OTTAWA — Pessimism is hovering as Foreign Affairs Minister Chrystia Freeland embarks on a two-day visit to Washington starting Tuesday, with talks to modernize the North American Free Trade Agreement hanging in the balance.

Freeland has been a fixture in the U.S. capital in recent weeks, taking part in high-level NAFTA negotiations with U.S. trade czar Robert Lighthizer and Mexican Economy Minister Ildefonso Guajardo.

Freeland’s office isn’t saying if those talks are the main purpose of her visit.

But Prime Minister Justin Trudeau has been talking by phone with U.S. President Donald Trump and Mexico’s Enrique Pena Nieto in recent days, despite dwindling hope of reaching a deal.

Time is of the essence: Canada’s latest reprieve from potentially crippling U.S. tariffs on imports of steel and aluminum expires June 1, and there are fears they could go into effect without a NAFTA deal in place.

The three countries have been working around the clock in hopes of getting a deal in time for the current iteration of the U.S. Congress, and ahead of what’s expected to be a consequential election in Mexico July 1.

Freeland’s office had no comment Monday. But NAFTA stakeholders and observers remain skeptical that she will be able to accomplish anything substantial.

Jerry Dias, president of Unifor, has been a constant presence at almost every NAFTA discussion. But the head of Canada’s largest autoworkers union won’t be in Washington this time, convinced there remains “no chance” of progress by week’s end.

The rules governing autos have been a persistent thorn, with the U.S. seeking to stem the loss of manufacturing jobs to Mexico, a view Canada broadly shares. The continental content of what defines a North American-made automobile and the relatively low wages of Mexican workers have been the main sticking points.

Dan Ujczo, an American trade lawyer with Dickinson Wright PLLC, described Freeland’s latest visit as a “Hail Mary pass” that she will have much difficulty completing.

The best she could accomplish would be a deal in principle on autos, which would lead to a continuation of the current steel and aluminum exemptions, with the three countries attempting to finish the job next year, Ujczo said.

Even if the three countries somehow reached a full agreement on NAFTA this week, a deal has no chance of ratified in the U.S. this year, he added.

Trudeau spoke with Trump on Friday about bringing the negotiations to a timely conclusion, and had a similar call with Pena Nieto a day earlier.

The prime minister also expressed his “strong concerns” regarding the U.S. threat to slap tariffs of up to 25 per cent on vehicle imports, given the integrated nature of the two countries’ auto industries, his office said.

Prior to the call, Trudeau said publicly he planned to tell Trump the move would have an “incredibly negative effect” on the American economy.

The U.S. move likely stems from the difficult efforts to rewrite NAFTA, the prime minister added.

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