WASHINGTON — The vexing issue of securing more American access to Canadian dairy remained a major obstacle in NAFTA negotiations as Canada's lead minister on the continental trade pact departed the U.S. capital Friday.
Larry Kudlow, the director of President Donald Trump's National Economic Council, laid that out in the plainest terms possible during a televised interview Friday morning, hours before talks ended between Foreign Affairs Minister Chrystia Freeland her U.S. counterpart, trade czar Robert Lighthizer.
Freeland had come to Washington this week in an attempt to break the impasse in the 13-month renegotiation of the North American Free Trade Agreement, which was started at Trump's behest.
A senior government official, briefing reporters on background, said Freeland was departing Washington on Friday night, but would keep in touch with Lighthizer. Canadian and American negotiators would continue to meet, the official added.
Canada and the U.S. are trying to agree on a text that could be submitted to the U.S. Congress by month's end in order to join the deal the Trump administration signed with Mexico last week.
In addition to dairy, the two countries still have to resolve differences on culture and the Chapter 19 dispute resolution mechanism. Prime Minister Justin Trudeau has said Canada could be willing to be flexible on dairy, but Kudlow suggested Friday that Canada isn't offering enough.
"I think the United States would rather have a trade deal with Canada, but it has to be a good deal, right? And the word that continues to block the deal is m-i-l-k, OK?," Kudlow said on the Fox Business Network show "Varney & Co."
"I'm just saying, 'Let go. Milk, dairy, drop the barriers, give our farmers a break and we can fix some other things.' So I want to predict. I'll just say Bob Lighthizer is doing a great job and the president is encouraging it."
Freeland wasn't talking specifics this week, having made a deal with Lighthizer not to negotiate in public.
As she emerged Friday from her latest meeting with Lighthizer, she said the talks had entered a "very intense" phase of "continuous negotiations."
Officials are meeting "24-7" and "when we find issues that need to be elevated to the ministerial level, that's where Ambassador Lighthizer and I need to talk," Freeland said, adding that "there continues to be a lot of goodwill and good faith on both sides. The atmosphere continues to be constructive."
Freeland departed the headquarters of the United States Trade Representative for the Canadian Embassy for several hours of consultations. Officials announced her departure from the U.S. capital as its balmy, humid skies erupted into a fierce thunder storm.
It was part of a familiar rhythm that has taken hold this week during her time in Washington — back and forth between the two locations, while officials continue the nitty gritty negotiations, and Trudeau is kept in the loop in Ottawa.
The U.S. wants Canada to open its dairy market to greater American access, as it has done in two previous major trade agreements, with the European Union and in a re-booted Trans-Pacific Partnership.
The latter deal offered 10 other Pacific Rim countries access to 3.25 per cent of Canada's dairy market — and most analysts predict the U.S. will settle for nothing less in NAFTA.
Trump also wants Canada to scrap its two-year-old pricing agreement that has restricted U.S. exports of ultra-filtered milk used to make dairy products.
Both those issues are non-starters for the Canadian dairy industry, which makes the subject particularly politically charged in Ontario and Quebec.
The hope is for a trilateral agreement in principle that Congress can approve before Mexico's new president takes office on Dec. 1.
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.
"We do love Canada," Trump told supporters at a rally in Montana on Thursday night.
"They've treated us pretty badly in trade for the last 40 years, but that's OK, it wasn't my fault. We're going to make a fair deal with Canada, just like we did with Mexico."
Trump reiterated his desire to rename the 24-year-old continental trade deal after his "historic announcement" with Mexico.
"We're replacing NAFTA with a beautiful new brand, because it's a much different deal. It will be called the U.S.-Mexico trade deal," he said to partisan applause.
Trump said he thinks Canada will join the deal. But if it doesn't, the U.S. can live with that.
Mike Blanchfield, The Canadian Press