Where US and Canada disagree on NAFTA

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If they don't reach an agreement by the end of the week, President Trump has threatened to cut Canada out of the deal and forge ahead with a new pact with Mexico alone.

The negotiations are aimed at bringing Canada into the NAFTA fold, but Canada and the USA remain far apart on several issues including culture, dairy and the Chapter 19 dispute resolution mechanism.

In addition, the tentative deal would require that at least 75 percent of an automobile's value be produced in North America (as opposed to, say, China) if that vehicle is to qualify for duty-free importation into the US.

The last main obstacle to a trilateral deal is a dispute resolution mechanism from the 1994 pact that Canada insists on keeping and the United States wants nixed.

President Donald Trump on the trade negotiations between the USA and Canada.

In response to Trump's tough stance on whether Canada joins the deal or not, Trudeau has incredibly stated he will walk away from a new NAFTA deal unless it meets Canadian needs.

"We see there is a tendency to exploit short term emotions as a way of getting that capacity to govern".

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"There is good faith and good will on both sides".

Foreign Affairs Minister Chrystia Freeland did reference the need to uphold the NAFTA exception to "preserve Canadian culture" in a speech before negotiations began 13 months ago.

U.S. President Donald Trump has threatened to push ahead with a bilateral deal with Mexico, effectively killing the nearly 25-year-old three-country pact, which covers $1.2 trillion in trade. Trump announced a new deal with Mexico on Monday, and on Friday formally notified Congress that he meant to execute a new agreement in 90 days after talks broke down with Canadian officials.

But Trudeau is also digging in and vowing that Canada won't be pressured into a deal.

Canada's cultural exemption was absent from the Trump administration's list of negotiating objectives released before the start of the talks.

"There are a number of things we absolutely must see in a renegotiated NAFTA", he told reporters in the Pacific province of British Columbia.

He called NAFTA "a very stupid deal".

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If Trump follows through and excludes Canada from NAFTA 2.0, it would raise concerns in Canada, whose economy is heavily reliant on trade with its neighbor. The deal also says that 40-45% of every vehicle must be built by workers who earn at least $16 per hour, so that firms don't find it as profitable to move production to Mexico, where wages are lower than in the US.

"We know that a win-win-win agreement is within reach and that's what we're working towards", Freeland said.

"It won't be fine for Canada, but we love Canada", he is quoted in the report as saying. Mexico is also taking on a leadership role in the Alliance of the Pacific, a grouping of Latin American countries linked by free markets, while Canada past year struck a comprehensive trade deal with the European Union.

Canada wants a permanent exemption from President Donald Trump's steel and aluminum tariffs and the threat of auto tariffs to be removed.

Sources familiar with Canada's bargaining position insist Ottawa's push to maintain the cultural exemption has remained unresolved between the two neighbours.

Get the Monitor stories you care about delivered to your inbox. They were rushing to bridge their differences by the end of August so Canada could join a preliminary pact the US had struck with Mexico just days earlier.

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