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Trump, Trudeau posture on NAFTA's future

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WASHINGTON—Donald Trump and Justin Trudeau raised their trade brinkmanship to a new level yesterday with each saying they were willing to walk away from the North American Free Trade Agreement if they don't get what they want.

Trudeau started the day by branding Trump a rule-breaker to argue in favour of keeping a mechanism to resolve trade disputes while Trump hours later said Canada had more to lose than the U.S. if the two countries can't make a deal to preserve the three-country NAFTA.

“That's going to be fine for our country," Trump said. "It won't be fine for Canada.”

The bombast of the two leaders contrasted with the insistence of negotiators that the mood inside the room was constructive as talks hit what is being described as an intense phase.

Foreign Affairs minister Chrystia Freeland went out of her way to praise her counterpart, U.S. trade czar Robert Lighthizer, saying he was acting with “good faith" and "good will.”

“The atmosphere continues to be productive and constructive,” she said yesterday evening, adding both countries' officials would continue negotiating late into the night.

“We are making good progress," Freeland added. "We continue to get a deeper and deeper understanding of the concerns on both sides.”

Negotiations, now in their 13th month, are key to determining the economic and trade relationship among the three North American countries, with many workers' and industries' prospects hanging in the balance.

At the same time, Trump needs a win on trade ahead of the U.S. mid-term elections in November that will test the president's ability to keep control of Congress.

“We're not going to accept that we should have to sign a bad deal just because the president wants that,” Trudeau told Edmonton radio station CHED.

Trudeau offered some of his sharpest criticism of the unpredictable American president, saying Canada won't give an inch to Trump's desire to scrap NAFTA's Chapter 19 dispute resolution panels.

The chapter allows companies to have their differences settled by independent arbiters—something Trump views as an infringement of U.S. sovereignty.

“We need to keep the Chapter 19 dispute resolution because that ensures that the rules are actually followed,” Trudeau said.

“And we know we have a president who doesn't always follow the rules as they're laid out,” he noted.

The U.S. and Mexico reached a side deal last month, leaving Canada to negotiate separately with the U.S.

Trump hinted there might be progress towards a deal with Canada.

“I think we've come a long way toward them treating us fairly,” he remarked.

But other issues have yet to be worked out, including Canada's cultural exemption in NAFTA.

Sources familiar with the Canadian bargaining position say the cultural exemption Canada has insisted on preserving since NAFTA talks reopened remains an 11th-hour sticking point.

Canada and the U.S. need to present an agreed-upon text to the U.S. Congress by Oct. 1 in order to join the deal the Trump administration signed with Mexico.

Trump is threatening to move ahead on a deal with Mexico that excludes Canada.

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

Freeland wouldn't guess how much more time negotiators will need to come to some agreement, comparing the trade negotiation to the advice a midwife gave her on giving birth.

"You never knew for sure how many contractions it would take to give birth to your child but you knew that each contraction was one contraction closer to the end.

“I think that's where we are,” Freeland added.

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