On August 31, after a week of talks, Canada and the United States failed to reach agreement on a new NAFTA that aligns with the bilateral U.S.-Mexico agreement reached on August 27. Among the key outstanding issues is the U.S. objective of opening up Canada’s dairy market and the Canadian objective of maintaining Chapter 19 of the original NAFTA’s dispute settlement for antidumping and countervailing duty cases. Canada will resume negotiations with the U.S. on September 5.

Despite the breakdown in talks, the Trump administration notified to Congress its intent to sign an agreement with Mexico, noting also the possible inclusion of Canada if agreement is eventually reached. The notification begins the 90-day timeline under Trade Promotion Authority (TPA) after which the administration can, according to USTR, legally sign an agreement with both Mexico and Canada. Although there are some legal questions as to whether adding Canada after the notification would fulfill TPA notification requirements, it is not likely to face significant challenge (most would like to see Canada included in the agreement).

60 days prior to signature, however, the Trump administration is still required under TPA to publish the text of the new NAFTA agreement, meaning a text must be agreed to and released by October 1 in order to achieve the administration’s goal of a signed agreement before December 1, when Mexican President Enrique Pena Nieto’s term ends. This likely means that Canada and the U.S. would have to agree on terms by the start of October, if not before.

If no agreement with Canada is reached, it remains possible that the Trump Administration would seek to terminate the existing NAFTA and replace it with the August 27 bilateral U.S.-Mexico agreement. This of course would raise the significant legal and political concerns noted in our August 29 post.