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Update: US says Canada's dairy stance remains an obstacle in trade talks

Issues surrounding dairy products continue to impede negotiations between the U.S. and Canada as the two countries hold last-minute talks on a revised North American Free Trade Agreement, according to the Office of the U.S. Trade Representative.

"The negotiations between the United States and Canada are ongoing," a USTR spokesperson said in a rare statement on pending trade matters. "There have been no concessions by Canada on agriculture."

The comments come as Canadian Minister of Foreign Affairs Chrystia Freeland meets with U.S. Trade Representative Robert Lighthizer in Washington in an effort to secure a deal by the end of Aug. 31.

'Not there yet'

Freeland told reporters outside of the USTR offices just after 11 a.m. ET that "we are not there yet" following roughly two hours of meetings, adding that the two sides are "working hard to find that win-win space."

Canadian Prime Minister Justin Trudeau said in a separate news conference the morning of Aug. 31 in Oshawa, Ontario, that his country "will only sign a deal if it is a good deal for Canada."

The Trump administration set Aug. 31 as a deadline for a trade agreement so it can begin the formal 90-day congressional notification process required by U.S. law. The administration is hoping to have a new trilateral pact signed by current Mexican President Enrique Peña Nieto before Mexican President-elect Andrés Manuel López Obrador takes office Dec. 1.

Dairy has been a persistent sticking point in negotiations with Canada. The U.S. called on Ottawa to open access to its market, which the Trump administration argues is bound by high tariffs that limit dairy export access and hurt American suppliers.

U.S. dairy exports to Canada are subject to a tariff-free quota, with any shipments over that limit subject to high tariff rates. Levies are set at 245.5% for cheese, 277% for ice cream and 298.5% for butter.

Trump said Aug. 30 that he is confident Canada will ultimately make concessions.

"Canada's going to make a deal at some point," Trump said in an interview with Bloomberg. "It may be by Friday or it may be within a period of time, but ultimately they have no choice."

Trump goes off the record

The Toronto Star reported Aug. 31 that off-the-record remarks by Trump in the interview may also be complicating the process.

According to the Star, Trump said a deal with Canada would be "totally on our terms" but that he could not say so publicly because "it's going to be so insulting they're not going to be able to make a deal."

Trump appeared to confirm the Star report with a midafternoon tweet. "Wow, I made off the record comments to Bloomberg concerning Canada, and this powerful understanding was blatantly violated," Trump tweeted. "Oh well, just more dishonest reporting. I am used to it. At least Canada knows where I stand!"

In her remarks to reporters Aug. 31, Freeland did not answer questions regarding whether the U.S. side was negotiating in good faith but noted that her team was scheduled to continue talks later in the day.

"The starting positions at the beginning were very far apart," Freeland said. "I think at this point we know what each side needs. … My job is to find the deal that works for Canada."

The U.S. and Mexico announced Aug. 27 that they had reached a bilateral trade deal. Canada returned to the negotiating table days later.

Trump called the deal with Mexico "beautiful," adding that it would replace NAFTA. However, the full text of the agreement with Mexico has yet to be released.