Washington, Aug 31 (AFP) Canada and the United States faced roadblocks as they went down to the wire Friday in talks to salvage the North American Free Trade Agreement, and one may have come from dealmaker-in-chief Donald Trump.

With the US deadline to get an agreement by Friday, there were reports the sides were struggling to find compromise on the NAFTA mechanism for resolving trade disputes and on Canada's managed dairy market.

And then came reports from the Toronto Star that Trump boasted in an interview that he was playing hardball with Canada in the negotiations, saying, "I can kill these people."

The newspaper said officials in the government of Prime Minister Justin Trudeau, who had been optimistic about reaching a deal with Washington, were angered by the off-the-record comments made in the interview Thursday with Bloomberg, which they saw as confirmation the US was not negotiating in good faith.

Trump's public statements in the interview and elsewhere have been more positive, although he has frequently criticized Canada's high dairy tariffs and insisted the US will demand changes.

"I think we're close to a deal," he said.

Talks continued late into the night again between Canada's Foreign Minister Chrystia Freeland and US Trade Representative Robert Lighthizer, but signs of hardening positions could derail efforts to bridge differences and preserve the three-nation trade pact with the US and Mexico.

"The negotiations between the United States and Canada are ongoing. There have been no concessions by Canada on agriculture," a USTR spokesperson told AFP, in the first comment from the US side since talks began Tuesday.

Freeland had been resolutely upbeat all week saying the sides were making progress, but on Friday morning she stressed that "We're looking for a good deal, not just any deal." "We always stand up for national interest," she said, adding. "We will only agree to a deal that's a good deal for Canada. We're not there yet."

The White House plans to notify Congress on Friday of its intention to enter into a new free trade agreement in order to provide the required 90 days' notice that would allow NAFTA 2.0 to be signed by December 1, when Mexico's new president will take office.

Although Trump has threatened to leave Canada on the sidelines and proceed with a trade deal with Mexico alone, trade experts say the White House lacks the authority to substitute a two-party deal.

Mexico's President-elect Andres Manuel Lopez Obrador said Friday he hoped NAFTA would remain a three-nation pact.

"If we managed to advance in the case of Mexico, there's no reason to exclude Canada. We hope they'll reach an understanding," Lopez Obrador said at a press conference at his offices in Mexico City.

Negotiators have worked for a year to update and rewrite the 25-year-old free trade pact, but have rushed in the past six weeks to get it across the goal line.

After Mexican officials worked out key issues on auto trade and worker rights, Canadian negotiators will need to find compromises on dairy trade rules, and how to handle some disputes among NAFTA partners, as well as patent protections for medicines.

Freeland said US and Canadian officials are "working hard to find that win-win," and stressed that the countries "are partners who are extremely important for each other." "We have the largest unmilitarized border in the world. Canada is the largest market for the United States, larger than China, Japan, UK combined," she said, noting more than $2 billion of business is done every day.

Freeland has declined to comment on the specific issues, but news reports suggest talks remain hung up on the dispute settlement procedures in Chapter 19.

The Globe and Mail cited sources as saying the US had resisted Canadian demands to keep the binational panels that Ottawa has employed to defend against US anti-dumping and countervailing duties, notably against its key lumber industry.

The daily also said Lighthizer has been pushing Ottawa to abandon cultural protections in a redraft of the agreement.

After Trudeau spoke with regional leaders, they appeared to soften their tone in defense of Canada's protected dairy sector, suggesting a compromise may be in the works that would grant the US greater access to the Canadian milk market.

If the White House notifies Congress on Friday, it will then have until September 30 to submit the final NAFTA agreement, but the sides will have to have the major points ironed out. (AFP)

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