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May 29, 2018 6:00 PM, EDT

Push for NAFTA Deal Continues as Congress, Tariff Deadlines Loom

Canada's Chrystia Freeland Freeland by Jonathan Levinson/Bloomberg News

Canada’s foreign minister is headed to Washington as the clock ticks down to reach a deal on updating the North American Free Trade Agreement that could pass Congress this year and skirt metals tariffs.

Chrystia Freeland will hold NAFTA meetings in the U.S. capital May 29-30, according to a statement from her office. She didn’t release a detailed itinerary but was scheduled to meet the morning of May 29 with U.S. Trade Representative Robert Lighthizer, according to a government official familiar with talks, speaking on condition of anonymity.

Time is running out. The United States has exempted Canada and Mexico so far from tariffs on steel and aluminum but tied that to NAFTA talks. Those exemptions are set to expire the morning of June 1, at the end of what the White House has called a “final” extension. U.S. House Speaker Paul Ryan also has suggested a NAFTA deal is needed around then to pass the current Congress.

Adding to pressure is a Mexican election July 1 that could usher in populist Andres Manuel Lopez Obrador as president, and the new threat of auto tariffs, which would hurt Canada and Mexico.

Major Concessions

The trio of NAFTA ministers doesn’t look set to meet.

Mexican Economy Minister Ildefonso Guajardo, leading NAFTA talks for his country, is in Paris May 29-30 for Organisation for Economic Co-operation and Development meetings.

Lighthizer attended those meetings last year and is expected to this year — but hasn’t confirmed a trip.

NAFTA talks lately have focused on the automotive sector, though other key barriers remain, such as over U.S. demands for an automatic termination clause. Mexico is said to have offered a major concession on autos — agreeing to require 20% of a car is built at high wages — in exchange for the United States dropping other controversial provisions. The United States hasn’t publicly responded.

Speaking May 28 in Ottawa, Freeland said the government is standing “firmly behind” her country’s autoworkers and chastised U.S. officials for the premise of auto tariffs — that Canada’s vehicle-manufacturing industry threatened U.S. national security. “The idea that Canada and Canadian cars could pose any kind of security threat to the United States is frankly absurd, and I have made that clear to the U.S. administration,” Freeland told lawmakers in Ottawa on May 28.

Guajardo said last week he sees a 40% chance of reaching a NAFTA deal before July 1, Mexico’s election day.

Unifor President Jerry Dias, whose union represents Canadian autoworkers and others, said there are many barriers to a deal.

“They have a lot of foolishness on the table that nobody’s going to agree to,” Dias said in an interview aired May 27 on Global News, referring to U.S. proposals. He frequently downplays the likelihood of reaching a deal, and did so again.

“The talks will continue, but there is no way that we can get this thing done in the short term.”