Freeland returning to Canada for break in NAFTA talks with no deal in hand

After two weeks of what Foreign Affairs Minister Chrystia Freeland described as "intense" NAFTA negotiations, she is returning to Canada for a break from the talks without a new deal in hand.

Sources told CBC News earlier Friday that despite efforts made by both sides, no deal was likely to land this week.

As Freeland and her counterpart, U.S. Trade Representative Robert Lighthizer, leave the negotiating table, it remains unclear how much was accomplished during the face-to-face meetings, or if the sides are any closer to a deal than they were two weeks ago.

Negotiators with the Canadian and American teams were holed up in the U.S. Trade Representative's office in Washington, trying to reach consensus on unresolved issues, such as Canada's desire to maintain the dispute resolution mechanism and protection for the country's cultural industries.

Canadian negotiators are eager to preserve Chapter 19 of the original trade agreement — a dispute settlement measure that can be used to challenge punitive anti-dumping and countervailing duty measures.

Canada has used the mechanism in the past to challenge American duties on softwood lumber. Lighthizer has long opposed this chapter of NAFTA as a violation of U.S. sovereignty.

Push for dairy

The U.S. also is trying to extract some concessions from Canada on the dairy front, demanding more access to a market that is largely protected from imports by supply management. Prime Minister Justin Trudeau has said repeatedly that he will not dismantle the country's farm policies.

Sources told the CBC News that progress up until this point has been "slow" and the Canadians are not expecting a major breakthrough by the end of today. Talk will now turn to scheduling the next round of negotiations, which will resume in two weeks' time because Lighthizer is headed to Europe.

I think the U.S. would rather have a trade deal with Canada, but it has to be a good deal. And the word that continues to block the deal is M-I-L-K.- Larry Kudlow, U.S. President Donald Trump's top economic adviser

Freeland said the talks have been "productive" and "constructive" to date.

"I think that you could say at this very intense point of the negotiations, we're really in a continuous negotiation phase and we're all working very hard," she told reporters Friday.

"In terms of where we are in this negotiation, I think it's very important to remember that in a trade agreement, it's not like running a race, where you can say which mile you're at. In a trade negotiation, nothing is done until everything is done. It's a lot of pieces coming together. We're making good progress on understanding each other, understanding what each side needs."

She has repeatedly declined to publicly identify which chapters of the original NAFTA are still in dispute.

Larry Kudlow, U.S. President Donald Trump's top economic adviser, said all sides are "working hard on a deal," but the Canadian side's desire to preserve supply management has been a source of frustration for the Americans.

"I think the U.S. would rather have a trade deal with Canada, but it has to be a good deal. And the word that continues to block the deal is M-I-L-K," he said in an interview with Fox Business on Friday.

"I'm saying let go. Milk, dairy — drop the barriers, give our farmers a break," Kudlow said.

Trump himself said Friday that "Canada is moving along … I'll see what happens.

"Look, everybody wants to deal with us. We've never had a president that dealt," Trump told reporters, repeating his claim that the existing NAFTA is the "worst trade deal in history."

"The farmers have done very poorly with NAFTA. We're opening up markets and making new deals."

In fact, the trade deal has been a boon for American farmers. Last year, U.S. farmers exported more than $38 billion worth of products to Canada and Mexico, or 28 per cent of all U.S. agricultural exports, generating billions in economic activity and tens of thousands of farm jobs.

Agricultural exports from the U.S. to these two countries have grown 450 per cent since NAFTA was signed in 1994.

Awkward moment for Kushner

Ahead of talks on Thursday evening, Jared Kushner, the president's son-in-law and a point man on relations with Canada, had an awkward moment with reporters when he struggled to get in the front door of the Winder Building, where the USTR offices are housed.

Kushner stood at the door for some two minutes, waiting to be let in, as Canadian reporters repeatedly asked him questions about the state of the talks — and whether he knew who wrote the anonymous op-ed in the New York Times that claimed there is a "resistance" within the Trump administration, working to thwart some of the president's impulses.

The CBC News video of the incident was picked up by a number of international news outlets.

'Unjustified and Illegal'​

Canada and the U.S. need to present an agreed-upon text to 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 that excludes Canada — but he also needs a win on trade ahead of midterm elections in November that will test his ability to keep control of Congress.​

Trump already has imposed hefty tariffs on Canadian and Mexican steel and aluminum, using a section of U.S. trade law that gives him the authority in the name of national security.

Freeland reiterated her view this week that the fate of those tariffs was separate from the NAFTA talks, and she urged the administration to end its "unjustified and illegal" action.

With files from The Canadian Press