Sticking points remain as U.S.-imposed deadline looms for NAFTA deal

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Sticking points remain as U.S.-imposed deadline looms for NAFTA deal


OTTAWA — U.S. President Donald Trump and Prime Minister Justin Trudeau are not expected to sit down face-to-face at the United Nations General Assembly this week as NAFTA talks hang in the balance.

Both leaders are in New York in the days before the U.S.-imposed deadline of Sept. 30 to submit to Congress the text of a modernized North American free trade pact that would cover U.S. trade relations with Mexico and Canada.

Prime Minister Justin Trudeau addresses the Nelson Mandela Peace Summit on Monday, a day before the start of the United Nations General Assembly in New York. Trudeau is not expected to meet with U.S. President Donald Trump during his trip.
Prime Minister Justin Trudeau addresses the Nelson Mandela Peace Summit on Monday, a day before the start of the United Nations General Assembly in New York. Trudeau is not expected to meet with U.S. President Donald Trump during his trip.  (DON EMMERT / AFP/GETTY IMAGES)

It is possible that deadline could pass without the two sides coming to an agreement.

A Canadian official, speaking on background to discuss the issues at play, said Foreign Affairs Minister Chrystia Freeland has been in touch with her counterpart, U.S. Trade Representative Robert Lighthizer, over the past weekend, and it is likely the two will meet Tuesday on the UN sidelines, along with Trudeau’s chief of staff, Katie Telford, and Trump’s son-in-law and key adviser, Jared Kushner, who have also been informally in touch.

However, what is less clear is whether there is a basis to resume formal negotiations to meet the deadline.

Since last Thursday, when Freeland left Washington, both sides have put forward their views, but not much has changed, said the official.

Canada still insists there must be a robust, rules-based system to resolve trade disputes between countries, such as that contained in Chapter 19 of the current NAFTA deal.

“It is Canada’s strong view that, particularly on Chapter 19 but also some other issues, we need to see further movement from the United States if we’re going to get there,” said the Canadian source.

Other sticking points remain, including Canada’s desire to win assurances the U.S. will lift its 25-per-cent tariff against Canadian steel and a 10-per-cent tariff on aluminum. Canada also wants the U.S. to drop its latest threat — to impose a 25-per-cent tariff on Canadian automotive exports to America — and its demand that Canada open its cultural industries to U.S. investment.

“In a perfect world, we’d have this wrapped up this week so that the deal can move forward seamlessly,” said the official, but Canada will not be “locked into any sort of a timeline, it has to be about the substance.

“We’re going to work away as constructively as we can ahead of the 30th to try to be a part of whatever the Americans send to Congress, but if we can’t get there on substance, then that date will come and go. What that world looks like afterwards, in many ways it’s up to the Americans to decide what they want to do then,” said the official.

Among other points of disagreement are concessions Mexico made in its bilateral deal that Canada is fighting.

For example, Mexico agreed to a higher level of duty-free online shopping. However, in its agreement to not apply duty on goods up to $100, it also agreed to not apply sales tax, said the Canadian source — something Canada is not willing to do.

“If you applied that to Canada, for example, if you went online to CanadianTire.ca and bought something for $80, you’d have to pay the GST (sales tax), but if you went on to Amazon in the U.S., if we were to accept what the Mexicans have done, then Canadians would not have to pay. It would just be a fundamental unfairness that we cannot abide. So, it is the view of the Canadian government that giving an unfair tax advantage to U.S. retailers over Canadian retailers is just not on.”

Meanwhile, the association representing Canada’s generic drug makers released results Monday of a public opinion survey it commissioned expressing concern over another concession Canada may make at the NAFTA table.

The survey suggests most Canadians put a high priority on access to affordable prescription medicines, and are worried that Canada could agree — as Mexico did — to extend patent protection in the pharmaceutical sector to 10 years.

The Canadian official who spoke to the Star declined to go into detail about negotiating positions, but noted the 2017 Canada-European Union trade agreement (known as the Comprehensive Economic and Trade Agreement, or CETA) allowed an eight-year patent protection, and pegged the cost of guaranteeing longer patent protections for “innovative” patented drugs at $392 million nationally. When you include drugs dispensed in hospitals, clinics and care facilities, those costs reach more than half a billion dollars (in 2015 dollars).

The Canadian official acknowledged that “any change to patent protection on drugs obviously has an impact on costs, one way or another.”

Jim Keon, president of the Canadian Generic Pharmaceutical Association, urged the Canadian government in a written statement to “not trade away timely access to generic and biosimilar medicines in a new NAFTA.

“Any such concessions would be harmful to Canadians, harmful to our industry and provide an enormous gift to the brand-name pharmaceutical industry — an industry that already enjoys some of the highest prices in the world for their products and some of the world’s most favourable IP laws, while making virtually no investments in Canada,” Keon said.

Tonda MacCharles is an Ottawa-based reporter covering federal politics. Follow her on Twitter: @tondamacc





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