What to watch for if the NAFTA talks conclude

More than a year of negotiations might reach abreakthrough Friday, ifCanada, the United States and Mexico agree on arewrite of the North American Free Trade Agreement.

The talks, which kicked into high gear on Monday when U.S. President Donald Trump said he'd struck a new, preliminary deal with Mexico had reached a "very intense rhythm" by the end of the week, according toForeign Affairs MinisterChrystiaFreeland.

"We've all had a night to reflect," Freeland said on her way in Friday morning, adding she was looking forward to hearing what the Americans had to say.

Here's what to watch for if a new, trilateralagreement is reached by Friday's deadline:

The cornerstones

The critical objective for all three sides has beena new chapter on the automotive sector, whichrepresents about a quarter of NAFTAtrade. Based onMonday's announcement,Canada's likely signingoff onnew rules for determining whatvehicles and parts are eligible to avoid tariffs.

Anew agreement could ease uncertainty inNorth American supply chains, and dodgeTrump's threat of car tariffs as high as 25 per cent at least for those vehicles that comply. But analysts suggest that, even without punishing tariffs, cars will be more expensive in North America and itsindustry will beless competitive globally.

Atleast two of NAFTA's dispute settlement chapters areon the table.

Chapter 11, which allows companies harmed by arbitrary government actions to sue, waswatered down in the agreement with Mexico. Canada might approve, or lobby to go further.Ottawaagreed to suspend similarinvestor-state dispute settlement provisions and pursue a permanent court-based approachin its trade deal with the European Union.

Chapter 19, which allows companies who feel their imports have been unfairly hit with anti-dumping and countervailing duties to request NAFTApanel arbitration, is something the U.S. wantsto scrap. Canada has beenfighting to keep it.

Debate over NAFTA'sdispute mechanisms comes as all three countries consider sweeping reforms to the World Trade Organization. The WTOcould mediate disputes if efforts to strengthen it succeed, but Trump mused about pulling out of the WTOentirely again this week.

Concessions to bracefor

As Jean Charest said, Canadais trying to find a way to allow Trump to say "I won" while still being able to say "[we] have not lost."

Trump has made it plain thatAmerican farmers must be able to export more to Canada.

The U.S. needs to export milk to deal with its chronic oversupply problem one thatCanada avoids with its strictproduction quotas. The dairy sector was said to be one of the last unresolved items as NAFTAtalkscontinued into Thursday night.

The egg and poultry sectors also benefit from Canada's supply management system. It's unclear whether they're on the table again too.

Parts of the draft intellectual property agreement with Mexico longer exclusivity periods for costly biologic drugs, or an extension of copyright terms to 75 years could also be tough for Canada.

Plus, as any trade watcher will tell you: Prepare for the fine print.

What mightbemissing

Some of Canada's objectivesseem like long shots, particularly if talksstick to a "NAFTA-light" scenario, focusing only onpriority chapters, for speed.

Canada might have wanted to open up governmentprocurement, but given Trump's fondness for "Buy America," that feels like a tall order.

Some industries wanted to reviselabour mobility provisions, updatingalist of professions to include jobs that didn't exist in 1993.

But on Monday, asked if the number of NAFTAProfessional (TN) visas would change, one U.S. official said bluntly: "No."

The Liberal government promotesits "progressive" trade agenda, aimed at keeping key voters onside. While more labour and environmental protections are expected, it's unclear whether the tight negotiating timelinesallowa gender chapter, asCanada's added to other agreements, or an Indigenous chapter.

The U.S. wanted a five-year sunset clause on the entire, renegotiated agreement, butits deal with Mexico backed that offto a16-year term, renewable following a six-year review.

NAFTAis the newTPP

You'll neverhearAmerican officials say it, because TrumpthinksBarack Obama's trade agreementwith 11other Pacific Rim countries was a horrible deal.

But when thepreliminary deal with Mexico was announced, it included things the U.S. gaveup when Trumppulled out of the Trans-Pacific Partnership,like tougherintellectual property clauses. (Remember the fight over "notice and takedown" requirements for online copyright violations? It's back.)

Part of why Canada wanted tojointheTPPnegotiations, alongsidethe U.S. and Mexico, was that it was aNAFTAdo-over: a way to update chapters written in theearly1990s.

When the U.S. gave up on theTPP, it needed ado-over: updatingNAFTA.

"There literally is not an area where we didn't 'plus up' whatwe did before," said oneU.S. official, who was asked what was different. If all three countries reacha newNAFTA,pull out theTPPtextandcompare.

What happens next?

Officials said an agreementwill be notified to the U.S. Congress onFriday: either a deal between the U.S. and Mexico, which Canada could join, perhaps within the30 days before a final text is due, or a new trilateral deal. Meeting thisdeadline means the outgoing Mexican administration can sign it before its Dec.1 handover.

Alot could still go sideways. A new U.S. Congress will be elected in November, and those lawmakerswill vote yea or nay on the Trump administration's work. Criticsalready predict a vigorous debate about whether this is really a betterdeal.

The incoming Mexican administration sat in on the final talks, but if Mexicanoppositionramps up, it's unclear how the new president, Andres Manuel Lopez Obrador, will respond.

Canada's federal election is a year out. But alarge loss for the dairy industrycould be expensive for Finance Minister BillMorneau'spre-election budget: the Harpergovernment's concessions inTPPcame with a compensation pledge of over $4 billion.

Provincial elections are also on in New Brunswick and Quebec, where a big dairy concession would be big news.

Canada and Mexico will wantthe U.S. to de-escalate theirsteel and aluminum tariff fight, and provide assurances car tariffs are off the table. Watch to see if Canada ramps up itsemergency safeguard measuresin return, to guarantee Trump thatcheap foreign steel isn't entering North America.