U.S. alcohol bans must end for trade deal to happen, Canada's ambassador told council: sources

Trade group also heard former Canadian chief trade negotiator's concerns about deal during call

Canada's ambassador to the U.S. said on a video call Thursday that putting American alcohol back on Canadian shelves is a mandatory prerequisite toward locking in a deal with the U.S. to avoid new tariffs, CBC News has learned.

Mark Wiseman made the comment while giving a high-level briefing about the potential trade deal to about 100 members of the Canada-U.S. trade council.

The council, which is made up of businesses, industry groups and labour organizations, also heard from a former Canadian chief trade negotiator who expressed concerns about the deal.

Canada's negotiating team is in Washington for another round of down-to-the-wire talks with Trump's administration in an effort to avoid 50 per cent tariffs on billions of dollars of Canadian exports. The deadline for a deal is midnight Friday.

During his roughly 30-minute talk, Wiseman discussed a preliminary consensus to avoid the new tariffs, three sources on the call told CBC News. CBC News is not naming the sources because they weren't authorized to speak publicly about the discussion.

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Wiseman said about 35 Canadian officials are working at Canada's Embassy in Washington to finalize the language of a possible deal, according to sources. At the time of the call on Thursday morning, Wiseman said officials had hoped to get that work done within 24 to 48 hours, sources said.

Wiseman said the potential deal includes lowering steel, aluminum and auto tariffs along with changes to the way dairy import licences are allocated by the government. The dairy industry has warned that could lead to more American dairy products on Canadian retailers' shelves.

Once Wiseman left the call after about 30 minutes, one of the council's advisers — Canada's former chief trade negotiator Steve Verheul — warned of the pitfalls of the potential deal, multiple sources said.

Verheul led Canada through tense negotiations with the U.S. that led to the creation of the Canada-U.S.-Mexico Agreement, and also worked on the prior NAFTA negotiations.

He expressed concern to the council that while Trump's latest Section 338 tariffs pose an immediate threat, Canada risks trading away a long-term advantage with a potential deal. Sources said he suggested there are issues with agreeing to accept sectoral tariffs and making these kinds of concessions.

CBC News has reported that under the potential agreement the U.S. would lower steel and aluminum tariffs from 50 to 25 per cent.

The deal is also expected to cut Trump's headline tariff rate on Canadian-built cars and trucks from 25 per cent to 15 per cent, with an exemption for American content, a source said.

Sources on the Canada-U.S. trade council's call said participants reacted when Wiseman broke the news that the auto industry isn't getting what it really wanted.

The Canadian auto sector had been pushing for an exemption for Canadian-made content from American tariffs, but learned on the call from Wiseman that the Americans are not relenting and that the matter will instead be deferred to CUSMA negotiations, sources said.

WATCH | Negotiations continue as deadline looms:Verheul's message on the call to the council was that if Canada heads in this direction, it's giving up most of its leverage now before entering into the CUSMA review, and he warned that such a move would only lead to further demands from the Americans, sources said.

He suggested that Americans for the most part don't support Trump's tariffs, and the American industry is nearly unanimous in supporting the continuation of CUSMA, including duty-free trade, sources said.

Verheul told the council that Canada is looking at making significant concessions at a time when the U.S. industry can still put pressure on the Trump administration.

WATCH | Why booze is at the centre of Canada-U.S. trade talks:Sources said Verheul warned that it's important for Canada to formally state right now that it doesn't accept the Trump administration's sectoral tariffs on aluminum, steel and autos as legitimate.

According to sources, he said getting to duty-free trade must still be among Canada's objectives at the upcoming CUSMA review, and Canada must make that clear if it's going to offer these kinds of concessions.

He also said the Canadian government isn't adequately consulting with industries involved, and premiers weren't briefed with substantive data, sources said.

Industry sources told CBC News that unlike in past negotiations, they've been left in the dark while the U.S. industry is being briefed by the Trump administration in far greater detail. Sources said members of the council expressed frustration about that on the call.

Another one of the council's advisers, former finance minister and deputy prime minister Chrystia Freeland, was also on the call, sources said. Freeland led Canada's effort during talks with the Trump administration to renegotiate NAFTA into CUSMA.

Freeland raised questions during the council's call and suggested if Canada heads down the track of agreeing to tariffs it will be difficult to remove them, even if the administration later changes in Washington.