U.S. Trade Represenative Robert Lighthizer releases a statement announcing the administration is filing a NAFTA Section 2202 trade modification “notification of intent” letter to congress:

Washington, DC – U.S. Trade Representative Robert Lighthizer today issued the following statement regarding the status of trade negotiations with Mexico and Canada:
“Today the President notified the Congress of his intent to sign a trade agreement with Mexico – and Canada, if it is willing – 90 days from now.  The agreement is the most advanced and high-standard trade agreement in the world.  Over the next few weeks, Congress and cleared advisors from civil society and the private sector will be able to examine the agreement.  They will find it has huge benefits for our workers, farmers, ranchers, and businesses.
“We have also been negotiating with Canada throughout this year-long process.  This week those meetings continued at all levels.  The talks were constructive, and we made progress.  Our officials are continuing to work toward agreement.  The USTR team will meet with Minister Freeland and her colleagues Wednesday of next week.”  (link)

Under the original 1993 terms and Chapter 22 of the Implementation Act, Lighthizer notifies congress that trade parties have modified the terms; this is the Section 2202 notification of modification. Ninety days after the date of the notification the U.S. and Mexico can sign the new terms of agreement; congressional approval is not required. [Canada can still join the U.S-Mexico agreement but they need to act fast.]
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Continual emphasis on the severity of Canadian politics is needed to understand the latest developments in the U.S-Canada trade negotiations.
The Trump administration set a deadline of today for Canada to join the U.S-Mexico trade agreement and make the NAFTA replacement agreement a three-way pact.  The concessions needed by Justin Trudeau and Chrystia Freeland to join the agreement were politically devastating.

In order for Canada to accept or join, via a NAFTA 2202 modification, they would need to agree to the U.S-Mexico modification terms. For Canada they would have to:

• open their telecommunications and banking sector (eliminate non tariff barriers).
• eliminate soft-wood (lumber) and aeronautics subsidies.
• begin a process of lowering their assembly use of Chinese/Asian goods.
• accept the rules of origin for North American manufacturing.
• eliminate protectionist tariffs on dairy and farm products.
• accept the U.S-Mexico terms for arbitration and dispute resolution.

President Trump and U.S. Lighthizer are holding all the cards.  As we previously highlighted they don’t care if Canada doesn’t join; the U.S. would likely prefer to send congress a NAFTA 2205 withdrawal notification removing the U.S. from the original 1993 NAFTA construct in combination with a simultaneous 2202 modification notification for the U.S-Mexico side of the agreement.
This would allow the U.S. to go into a one-on-one trade negotiation where six months and a day from the 2205 notice. The U.S. would then apply 25% auto tariffs on Canadian made vehicles while negotiating a bilateral deal. Canada is in a very weak negotiating position; politics are paramount for the Canadian team; their exit needs political cover.  Media need to help the optics for the Canadian team.
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Prime Minister Justin Trudeau speaks Friday, August 31, 2018 about the Canadian perspective on trade negotiations with the U.S. – Everything about the Canadian position is framed through the prism of politics not economics. Virtue signalling is the primary tactic.
Trudeau and Foreign Minister Chrystia Freeland are in a tenuous position, they cannot accept the terms of the U.S-Mexico deal because they cannot afford to drop the protections and carve-outs within their highly controlled and subsidized economy. Canada would have to: drop telecommunications and banking barriers; drop protectionist tariffs on Dairy and agricultural products; and drop subsidies for the lumber and aeronautics industry.

It will be very interesting when the joint committee releases the transcript from Lisa Page and Bruce Ohr.   In another article containing information from Bruce Ohr’s closed-door testimony we highlight two key points (emphasis mine):

Kim Strassell – […] Congressional sources tell me that Mr. Ohr revealed Tuesday that he verbally warned the FBI that its source had a credibility problem, alerting the bureau to Mr. Steele’s leanings and motives. He also informed the bureau that Mrs. Ohr was working for Fusion and contributing to the dossier project.

The admission that Nellie Ohr was contributing to the dossier is a really important specific point.  We always suspected some of the dossier content was attributable to Mrs. Ohr, this confirms that suspicion.
Additionally, on the day before Mr. Ohr testified to congress, embarrassingly the New York Times launched a proactive defense surrounding his predicted testimony; within the August 27th article they cited Fusion GPS as a source saying Nellie Ohr never worked on the dossier (see screengrab):

(article link)

Whoopsie…
Obviously Mr. Ohr did not tow-the-media-predicted-line.
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Last Sunday Representative Darrell Issa was being interviewed by Maria Bartiromo about the testimony of Bruce Ohr when Issa innocuously said that Nellie Ohr was working for Fusion GPS in 2015.  Previous to that statement by Issa the timeline for Nellie Ohr working with Fusion GPS began in April of 2016 (simultaneous to Fusion beginning the contract work for the Clinton Campaign and sub-contracting of Chris Steele).

If the 2015 date was correct, this was a big deal; a VERY BIG deal.  Well, today amid other revelations within an excellent report by Chuck Ross at the Daily Caller, the 2015 date is confirmed:

[…] Republicans pressed Ohr about how his wife, a Russia expert named Nellie Ohr, came to work for Fusion GPS.
Ohr testified that Fusion approached his wife for a job and that she began working for the research firm in late 2015. California GOP Rep. Darrell Issa said Ohr testified that his wife was paid $44,000 by Fusion GPS. As TheDCNF has reported, Ohr did not disclose his wife’s Fusion income on his annual ethics disclosure form.

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The sketchy story of the jihadist training compound in New Mexico takes yet another weird turn today.  A New Mexico judge dismissed all charges against three suspects tied to a compound where alleged Muslim extremists reportedly trained children to be school shooters.

New Mexico – District Judge Emilio Chavez on Wednesday dismissed charges against three of the five defendants, ruling that authorities violated the state’s “10-day rule.”
Child abuse charges against Lucas Morton, Subhannah Wahhaj and Hujrah Wahhaj were dropped because prosecutors missed the 10-day limit for an evidentiary hearing to establish probable cause.

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Today DOJ Official Bruce Ohr is testifying in a closed-door session to a joint House Oversight and Judiciary Committee.  The republican representatives asking questions were selected by Chairman Bob Goodlatte.  Democrats are relying on staff.
According to Kyle Cheney (Politico) Bruce Ohr has four lawyers with him, personal lawyers and lawyers representing the interests of the DOJ.  Initial indications are Ohr has provided testimony that directly conflicts with Fusion-GPS Glenn Simpson, and prior testimony from witness Lisa Page to the joint committee.

Commerce Secretary Wilbur Ross appears on Fox News to discuss the U.S-Mexico trade agreement and the unlikely possibility of Canada to join the agreement.  In order for Canada to join the agreement they would need to remove protectionist tariffs (dairy); remove subsidies to several sectors (lumber, aeronautics); and in large measure open their economy to free, fair and reciprocal trade.
Additionally, The Wall Street corporations who have exploited NAFTA for strategic financial advantage are unhappy with the removal of the NAFTA loopholes.

By choosing politics over fundamental trade economics Justin and Chrystia from Canada have painted themselves into an isolated position on the renegotiated North American Trade deal.  Here’s the basic Canadian conundrum.

The U.S. and Mexico have agreed to manufacturing origination terms; wage and labor improvements; elimination of AG subsidies and non tariff barriers; and removal of all protectionist tariffs – so long as the structural terms of commerce are upheld.
In order for Canada to join the U.S. Mexico deal they would need to:

• (1) eliminate soft-wood subsidies in the lumber sector;
• (2) eliminate protectionist tariffs in the AG (Dairy) sector;
• (3) accept the 75% rules of origin, eliminating the NAFTA loophole;
• (4) agree to the enforcement mechanisms for all the above;
• (5) allow U.S. banks to operate in Canada (financial sector).

Each of these five issues, now locked-in and agreed by the U.S. and Mexico are “take-it-or-leave-it” terms for Canada to join. There’s almost no-way, given the politicization of the Canadian plan, for Justin and Chrystia to agree to those terms and keep their fragmented political support base appeased.
Therefore, absent total acquiescence, it is likely Canada will keep their soft-wood lumber subsidies, keep their protectionist Dairy tariffs, keep their banking rules blocking U.S. access, and face a 25% duty on U.S. auto imports – effectively destroying their auto manufacturing sector.  Car companies (ex. Toyota) will simply leave Canada and return to building/assembling in the U.S.
Here’s the content from a conference call filling in more details:
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So much good news: WASHINGTON (Reuters) – The trade deal between the United States and Mexico will stand even if Canada does not come to an agreement with the Trump administration in the renegotiation of the North American Free Trade Agreement (NAFTA), Mexico’s foreign minister said on Monday.

“If for any reason the government of Canada and the United States do not reach an agreement, we already know that there will still be a deal between Mexico and the United States.”
~ Mexican Foreign Minister Luis Videgaray (link)

Remember those “private meetings” between Jesus Seade and Robert Lighthizer?
It is said: a picture is worth a thousand words.  Cue the audio visual:

The incoming Mexican President, Andrés Manuel López Obrador,(AMLO)’s representative is Jesus Seade. The outgoing Mexican President Pena Nieto’s representative is Mexican Secretary of Economy Idelfonso Guajardo.
Why the joy in Seade and the defeated Guajardo?  The answer is in the details:
One of President Trump’s principal objectives in the renegotiation is to ensure the agreement benefits American workers.  The United States and Mexico have agreed to a Labor chapter that brings labor obligations into the core of the agreement, makes them fully enforceable, and represents the strongest provisions of any trade agreement.

Key Achievement: Worker Representation in Collective Bargaining

The Labor chapter includes an Annex on Worker Representation in Collective Bargaining in Mexico, under which Mexico commits to specific legislative actions to provide for the effective recognition of the right to collective bargaining.

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