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NAFTA talks resume as Trump says they're on track for deal

Chrystia Freeland, Canada's minister of foreign affairs (center) talks to Bob Lighthizer, U.S. trade representative, next to Ildefonso Guajardo Villarreal, secretary of economy for Mexico (right) after opening statements during the first round of North American Free Trade Agreement (NAFTA) renegotiations in Washington, on Aug. 16, 2017. Bloomberg photo by Andrew Harrer.

Talks to update NAFTA are edging toward their next deadline with signs of optimism from President Donald Trump, as the U.S. and Canada push to resolve enough differences to trigger a countdown to sign a new deal.

Trump and Canadian Prime Minister Justin Trudeau signaled Wednesday an accord could be reached.

"We're doing really well," Trump told reporters at the White House. "They want to be part of the deal. And we gave till Friday and I think we're probably on track." Trudeau acknowledged the Friday deadline cited by Trump, said they were pushing toward it but will only sign the "right deal."

The tone sounded more positive than a Monday, Aug. 27, news conference at the White House, where Trump called outgoing Mexican President Enrique Pena Nieto on speakerphone to announce a two-country deal to redo the North American Free Trade Agreement. He urged Canada to take it or leave it, and threatened to apply new tariffs on Canadian auto exports otherwise.

Trump said again Wednesday it would be worse for Canada to not reach an accord.

The talks are being held in Washington, led by U.S. Trade Representative Robert Lighthizer and Canadian Foreign Minister Chrystia Freeland. The pair resumed negotiations on Thursday after lower-level officials worked late into the night, Freeland told reporters outside USTR, adding officials still have a lot of work to do in a short amount of time.

"This is a very, very intense set of conversations and I continue to feel that there is a lot of goodwill on all sides," Freeland said. Trudeau will brief provincial premiers on Thursday about the discussions.

The U.S. has stressed Friday's deadline in its closed-door meetings with the Canadians, American officials familiar with the talks said after the first session Tuesday. The U.S. negotiators are showing a willingness to reach a deal, said two Canadian officials, speaking on condition of anonymity. But Trudeau did express caution.

"We're seeing if we can get to the right place by Friday," he said Wednesday. "We're going to be thoughtful, constructive, creative around the table, but we are going to ensure that whatever deal gets agreed to is the right deal for Canada and the right deal for Canadians."

The U.S. is pressuring Canada to strike a deal so the Trump administration can inform Congress that it intends to sign a new trade pact to replace NAFTA. The U.S. is emphasizing the deadline, but there's some wiggle room -- analysts have said they don't necessarily need a full agreement by then, and Lighthizer has said he might be able to send a letter that leaves a door open to Canada joining.

"I think there's a really good chance" to get a "deal in principle" by Friday if both countries compromise, Bruce Heyman, a former U.S. ambassador to Canada, told Bloomberg Television on Wednesday. "What that means though is there's a lot of blanks that will need to be filled in" quickly to meet congressional deadlines, he said.

Commerce Secretary Wilbur Ross said Tuesday it's likely the deal will be voted on next year after American midterm elections in November.

Freeland has credited "significant" compromises from Mexico with clearing the way for a deal but said there is a "huge amount of work to do this week." The Canadian dollar pared losses after some of Freeland's comments.

Hurdles remain for Canada, although markets are betting an accord will be reached that includes Ottawa even as Trudeau's political rivals begin to blame him for risking NAFTA's collapse.

Two key issues for the U.S. and Canada are dairy and anti-dumping dispute panels. The U.S. wants to dismantle Canada's dairy system and kill the panels; Canada has signaled it would compromise on dairy and wants to preserve the so-called Chapter 19 panels. "The Canadian view on Chapter 19 is well-known," Freeland said late Wednesday.

There are warnings that U.S. trade law will prevent, or impede, Trump from forging ahead on a quick timeline with only a two-country accord, and key figures in Congress are calling for Canada to be included. Lighthizer has said he believes he can proceed without Canada. The Friday deadline would allow a signing before Mexico's president-elect, Andres Manuel Lopez Obrador, takes office on Dec. 1.

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This article was written by Josh Wingrove, and Andrew Mayeda,  reporters for The Washington Post.

Bloomberg contributors: Toluse Olorunnipa, Vivek Shankar, Debra Mao, Theophilos Argitis, Greg Quinn, Jennifer Epstein and Jennifer Jacobs.