October 21, 2018

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The Making of a New Nafta: The Canada Letter

The Making of a New Nafta: The Canada Letter
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Hi, this is Alan Rappeport, an economic policy reporter for The Times, based in Washington. I’m taking over this bonus issue of the Canada Letter in honor of the new North American Free Trade Agreement, or the United States-Mexico-Canada Agreement, as it will soon be known.

Who would have thought that the United States and Canada, two countries that are historically the best of friends and neighbors, would be staring down a midnight deadline on the brink of a trade war?

[Read: Trump Hails Revised Nafta Deal as a Trade Promise Kept]

But that is where we found ourselves last weekend. After months of hearings, meetings, missed deadlines and summer stakeouts outside of the United States trade representative office, most trade reporters, myself included, were not expecting that an agreement would really be reached over the weekend.

But then on Friday night, the Canadians, who had previously showered reporters with briefings, updates, notes of encouragement and even Popsicles, went silent. United States officials, who are notoriously less loquacious, also went totally dark.

Rather than negotiate on President Trump’s turf, Chrystia Freeland, Canada’s foreign minister (and, full disclosure, my former boss at Financial Times), scrapped her speech at the United Nations and hunkered down in Ottawa to huddle with Prime Minister Justin Trudeau. Hordes of Canadian reporters who had been camped out in sweltering Washington all summer were instead bemoaning the chilly autumn weather outside of Mr. Trudeau’s office.

By Sunday afternoon it was clear that things were getting serious.

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Congressional aides — the sieve of Washington — were getting briefed by the staff of Robert E. Lighthizer, Mr. Trump’s top trade adviser, and I started getting calls from lobbyists with fresh details.

In the early evening, a Mexican official sent me a text saying copies of the agreement would be delivered to Mexico’s Senate within hours. A colleague who covers the White House alerted me that Jared Kushner, a White House adviser who was on the United States negotiating team, skipped a Sukkot dinner to work on the deal’s finishing touches.

For much of the last year, White House officials lamented publicly and in private that the biggest obstacle to getting a new Nafta was Canada’s fixation on protecting its milk market. Two hours before the midnight deadline, sitting on my sofa in gym clothes next to my snoring Boston terrier, I messaged one of Mr. Trump’s closest economic advisers asking if Canada had finally yielded on dairy.

“Canada good,” this person simply said.

And the deal was done.

[Read: For Canada, a Sigh of Relief More Than a Celebration in New Nafta Deal]

Or was it? While most of the business world is happy that a trade war has been averted, Mr. Trump must get his trade treaty through Congress next year. That’s never an easy task, but if Democrats are in control after the United States’ elections in November, it could be even harder.

As Mr. Trump said on Monday, “In theory, there should be no trouble, but anything you submit to Congress is trouble, no matter what.”

Below are highlights from our coverage of the agreement, compiled by the Canada audience growth editor, Lindsey Wiebe.

— “Good for Canada, good for Mexico,” Mr. Trump said of the new trade agreement in remarks at the White House on Monday. As Alan reports, the updated Nafta is Mr. Trump’s biggest trade achievement to date and comes after more than a year of intense negotiations.

— Mr. Trudeau praised the new agreement as a win for Canada. But economists painted a more complex picture, writes our Toronto bureau chief, Catherine Porter.

There’s a lot to digest in the revised pact: New rules for auto production, reduced barriers for American dairy farmers to sell cheese and milk in Canada, and a tribunal for resolving trade disputes, retained in spite of United States efforts to eliminate it. Our tax and economics reporter, Jim Tankersley, explains what’s changed in the renegotiated agreement.

— Mexico’s incoming president Andrés Manuel López Obrador once had deep misgivings about Nafta. But hours after Canada joined the revised trade deal with Mexico and the United States, the president-elect welcomed news of the agreement.

— Late last month, Catherine and Alan profiled two players at the center of negotiations: Ms. Freeland and Mr. Lighthizer. The two differ widely in their backgrounds, approaches and priorities, and those differences extended to how each came to the negotiating table.

— Before the fraught relations and protracted negotiations, there was Canada’s ill-fated charm offensive. Guy Lawson delved deeply into Mr. Trudeau’s campaign against the American trade war for The Times Magazine in June.





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