NAFTA session with Canada breaks off after Trump 'so insulting' remarks

But foreign minister hopes for a 'win-win-win' if both sides are flexible

WASHINGTON/TORONTO — U.S. President Donald Trump notified Congress on Friday of his intent to sign a trade agreement with Mexico after talks with Canada broke up on Friday with no immediate deal to revamp the tri-nation North American Free Trade Agreement.

U.S. Trade Representative Robert Lighthizer said U.S. officials would resume talks with their Canadian counterparts next Wednesday with the aim of getting a deal all three nations could sign.

All three countries have stressed the importance of NAFTA, which governs billions of dollars in regional trade and a bilateral deal announced by the United States and Mexico on Monday paved the way for Canada to rejoin the talks this week.

But by Friday the mood had soured, partly on Trump's off-the-record remarks made to Bloomberg News that any trade deal with Canada would be "totally on our terms." He later confirmed the comments, which the Toronto Star first reported.

"At least Canada knows where I stand," he later said on Twitter.

The Toronto newspaper obtained an account of the comments and was able to report on them because it was not bound to Trump's off-the-record understanding, which was with Bloomberg.

Trump told the Bloomberg reporters on Thursday that he will not make any compromises in the talks with Canada — but that he couldn't say so publicly because "it's going to be so insulting they're not going to be able to make a deal."

Trump said any deal with Canada would be "totally on our terms" and that he was scaring Canada into submission with his tariff threats.

"Off the record, Canada's working their ass off. And every time we have a problem with a point, I just put up a picture of a Chevrolet Impala," Trump said. The Impala is one of many cars produced in Canada, which Trump has threatened to impose tariffs against.

His remarks immediately came to the attention of the Canadian delegation, which had already suspected the U.S. was not bargaining in good faith. One Canadian official had told the Star previous to learning of Trump's comments that the U.S. delegation was not offering "any movement." Apprised of what Trump said, the Canadian delegation raised his comments at the start of Friday's session. The Canadian government would not reveal what transpired.

But Canadian Foreign Minister Chrystia Freeland on Friday expressed confidence that Canada could reach agreement with the United States on a renegotiated NAFTA trade pact if there was "good will and flexibility on all sides."

"We continue to work very hard and we are making progress. We're not there yet," Freeland told reporters after days-long talks wrapped up without a deal.

"We know that a win-win-win agreement is within reach," she added. "With goodwill and flexibility on all sides, I know we can get there."

Ottawa has stood firm against signing "just any deal," with Prime Minister Justin Trudeau saying, "We will only sign a deal if it is a good deal for Canada."

The Canadian dollar weakened to C$1.3081 to the U.S. dollar after the Wall Street Journal first reported that the talks had ended on Friday with no agreement. Canadian stocks remained 0.5 percent lower.

Global equities were also down following the hawkish turn in Trump's comments on trade.

Lighthizer has refused to budge despite repeated efforts by Freeland to offer some dairy concessions to maintain the Chapter 19 independent trade dispute resolution mechanism in NAFTA, The Globe and Mail reported on Friday.

However, a spokeswoman for the U.S. Trade Representative said Canada had made no concessions on agriculture, which includes dairy, but added that negotiations continued.

The United States wants to eliminate Chapter 19, the mechanism that has hindered it from pursuing anti-dumping and anti-subsidy cases. Lighthizer said on Monday Mexico had agreed to cut the mechanism. For Ottawa, Chapter 19 is a red line.

Trump argues Canada's hefty dairy tariffs are hurting U.S. farmers, an important political base for his Republican Party — though his tariff actions against China have virtually eliminated U.S. soybean sales there. But dairy farmers have great political clout in Canada too, and concessions could hurt the ruling Liberals ahead of a 2019 federal election.

At a speech in North Carolina on Friday Trump took another swipe at Canada. "I love Canada, but they've taken advantage of our country for many years," he said.

Reporting by Julie Gordon and Sharay Angulo in Washington, Allison Martell in Toronto

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