Canada optimistic NAFTA deal can be struck this month

Canada's Foreign Minister Chrystia Freeland said discussions with US officials on the North American Free Trade Agreement are making progress

Canada's high dairy tariffs have been a target for Trump in the North American Free Trade Agreement, or NAFTA, renegotiations.

Speaking earlier in the day to reporters, Trump said talks with Canada are moving along.

One core question in the latest talks is which country has the leverage, and that's unclear.

U.S. President Donald Trump is threatening to cause the "ruination" of Canada if the countries can not reach a NAFTA deal, with sources pointing to dispute resolution and tariffs on cars as obstacles to a deal.

Trudeau said this week that his "red lines" are the preservation of the "Chapter 19" dispute resolution system, which allows Canada to challenge US duties at an independent panel rather than in USA courts, and the preservation of the "cultural exemption" that allows Canada to favour Canadian music, movies and television, among other cultural products, over US competitors.

These are realities sensed by American business leaders and also by governors of states that have Canada as their main trading partner, and members of the U.S Congress, both Democrats and Republicans. He has repeatedly threatened to hit Canada with the auto tariffs if Prime Minister Justin Trudeau does not make concessions, though he has never before used such dire language.

Despite pressure from Washington to sign onto a deal similar to the one agreed with Mexico, Ottawa has resisted.

Donald Trump before an announcement on NAFTA made from the Oval Office.

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"We are really in a continuous negotiation phase", Freeland said.

It all leaves talks looking like progress is being made, but also with no clear target for a handshake deal. "These tariffs are unjustified and illegal", she said Thursday. "A lot of these deadlines are artificial, but the end of September, with terms, is a very strongly held three-party objective". Details would still need to be hammered out before the text is published. Freeland was due to fly out of Washington on Friday evening, a senior Canadian official said, adding that further minister-level discussions would not likely be held until sometime next week.

The vexing issue of securing more American access to Canadian dairy remained a major obstacle in NAFTA negotiations as Canada's lead minister on the continental trade pact departed the USA capital Friday.

President Trump on Wednesday said "intense" negotiation's over a new North American Free Trade Agreement should result in a "fair deal" for the United States.

The goal of this week's talks is to reach a deal by December 1 so Congress can give its approval to a revised three-country NAFTA before Mexico's new president takes office. Freeland downplayed any urgency for Mexico to rejoin talks.

"Actually, on some countries, including Canada, a tax on cars would be the ruination of the country", he said.

Canadian Foreign Minister Chrystia Freeland talk to reporters outside the United States Trade Representative building in Washington, Thursday Sept. 6, 2018. Freeland said they will meet again Friday.

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