How Trump's son-in-law helped a $1.2 trillion trade zone stay intact

[October 02, 2018]  By David Ljunggren and Steve Holland

OTTAWA/WASHINGTON (Reuters) - Robert Lighthizer was the public face of arduous, year-long talks to rework NAFTA, but as he savored a successful conclusion in the White House Rose Garden on Monday, the U.S. trade representative singled out another man as the deal's architect.

"I've said before, and I'll say again, this agreement would not have happened if it wasn't for Jared," Lighthizer told reporters.

The 70-year-old veteran negotiator was referring to Jared Kushner, more than 30 years his junior and Donald Trump's son-in-law, whom the president had asked to help out on trade early in the presidency, especially on Canada and Mexico.

While Kushner's time in the White House has been turbulent - Chief of Staff John Kelly temporarily stripped him of his security clearance earlier this year and he has been criticized for his dealings with the Middle East - his role in keeping the North American Trade Agreement afloat was fundamental, multiple sources said.

A 37-year-old real estate tycoon married to Trump's daughter Ivanka, Kushner has the trust of his father-in-law, and crucially, is close to Lighthizer, a Canadian source with knowledge of the talks said.

His friendship with Mexican Foreign Minister Luis Videgaray, whom he knows from Wall Street, helped diffuse several blowups in that relationship and get a U.S.-Mexican deal over the finish line in August, another source close to the talks said.

"The deal fell apart more than once. And in every occasion it was one person that always found a way to put it back together: Jared Kushner," Videgaray told Reuters.

Similarly, from early on in the negotiations, two of Canadian Prime Minister Justin Trudeau's most trusted advisers - chief of staff Katie Telford and private secretary Gerald Butts - forged ties with Kushner, Hassan Yussuff, president of the Canadian Labour Congress, said in a phone interview. Yussuff was part of the NAFTA advisory council for Chrystia Freeland, Canada's lead negotiator in the talks and the country's foreign minister.

A second Canadian source said Telford and Butts flew to Washington to meet Kushner in the early days of the presidency.

Those connections came to the fore again last week, when the mood became toxic between Lighthizer and Freeland, as the U.S.-imposed Sept. 30 deadline to conclude the talks loomed.

A third Canadian source directly familiar with the talks said the Americans "were incensed" when Freeland took part in a Toronto panel entitled "Taking on the Tyrant," which featured derogatory comments about Trump, following an earlier speech criticizing U.S. trade policy.

Trump summed up the atmosphere in typically blunt fashion, saying on Wednesday, "We don't like their representative very much," as the Canadian negotiating team dug in on the politically sensitive issue of U.S. access to Canada's dairy market.

"There was a moment where the traditional channels of negotiations appeared to break down because they just could not get through some of the largest issues, dairy being one of them," said a person in Washington familiar with the situation.

Kushner kept talking to Butts and Telford, and on Thursday a message got through that the United States wanted to know what was non-negotiable for Canada. The answer went back that Chapter 19, a dispute resolution mechanism, was a red line.

By Friday morning it was clear that the Trump administration was not going to fight for Chapter 19 anymore - "the Americans blinked," said a fourth senior Canadian source with direct knowledge of the talks.

"I don’t think the administration itself was that hung up on (Chapter) 19, I think Robert Lighthizer was," Yussuff said.

The breakthrough triggered concessions from Trudeau's team, most importantly on dairy. The fourth Canadian source described the thinking as "better get dairy out of the way now" rather than negotiating from a weaker position if talks failed and Trump hit them with 25 percent auto tariffs, the stick he had used to hurry along talks with Mexico and Canada since May.

On Friday, Kushner got Lighthizer on a conference call with Telford and Butts. "Together the four of them worked through some of the outstanding issues and that led to a breakthrough in the negotiations, ultimately leading to the success of the deal,” said the person in Washington.

White House senior advisor Jared Kushner listens as U.S. President Donald Trump speaks at a dinner to honor evangelical leadership in the State Dining Room at the White House in Washington, D.C., U.S. August 27, 2018. REUTERS/Leah Millis

With a deal in sight, Mexico and the United States canceled plans to publish on Friday evening the text of their bilateral deal to give Canada the chance to join by the Sunday deadline.

The talks intensified, with Telford "talking on the phone the entire time," in the end with Kushner, said the fourth Canadian source.

The offices of Freeland and Trudeau did not respond to requests for comment. The White House declined to comment.

INTENSIFYING EFFORTS

It was by no means a foregone conclusion that NAFTA would survive. After demanding early last year that it be reworked in favor of the United States, Trump repeatedly threatened to toss in the trash the $1.2 trillion, quarter century-old agreement.

Tensions between the United States and Canada started at the top, with relations strained between Trump and Trudeau after acrimonious talks in Quebec City in June at a G7 summit.

“There was a lot of tension, I will say, between he and I -- I think, more specifically," Trump told a news conference on Monday. "And it's all worked out. You know when it ended? About 12 o'clock last night.”

Lighthizer, speaking on Monday, said, "If you’re not willing to walk away from an agreement, you cannot get one," holding his hands up to his head to describe how intense Trump had been on trade.

At every slump in the talks, which began formally in August last year, multiple players helped stabilize the situation. One of the hairiest moments was in April last year, when trade experts say Trump was close to triggering U.S. withdrawal from NAFTA, prompting frantic lobbying from business groups.

Trump changed his mind, according to one source close to the talks, only after his agriculture minister, Sonny Perdue, showed the president a map including all the Trump-supporting, farming states that would suffer lost exports if NAFTA collapsed.

Similarly, there was more to bringing the talks to a last-minute finale than just Kushner's efforts. Outside factors were also pushing all sides toward a deal.

In the weeks following the announcement of the Mexico-U.S. deal, U.S. and Mexican officials increasingly understood a new trade accord might not pass Congress without Canada on board, said one U.S.-based source familiar with the process.

Anxious to avoid the risk of being left with nothing, Videgaray and Economy Minister Ildefonso Guajardo, Mexico's lead in the negotiations, worked behind the scenes to "triangulate" communication between the Canadians and the Americans to try to "land" the deal, the source said.

"A bit of what they did was the role of an air traffic controller in the descent of that aircraft," the source said.

Videgaray's relationship with Kushner was a main safety valve that lowered tensions that had arisen gradually between Freeland and Lighthizer, the source said.

"(Videgaray) became a sort of conduit, a back-channel between Freeland and USTR via Jared to get this landed," the source added.

On the sidelines of the United Nations General Assembly in New York last week, Guajardo also tried to act as bridge between Lighthizer and Freeland, offering advice from his experience negotiating bilaterally with Lighthizer earlier in the summer, a Mexican source close to the talks said.

In the end, the talks went down to the wire, with Kushner abandoning plans to spend the Jewish festival of Sukkot with his family late on Sunday, the person in Washington said, as Canada and the United States thrashed out the last details of a deal. It was finally announced at 11:35 p.m. EDT, just 25 minutes before the deadline.

(Reporting by David Kjunggren and Steve Holland; Additional reporting by Roberta Rampton in Washington, Dave Graham and Frank Jack Daniel in Mexico City; Writing by Frank Jack Daniel; Editing by Leslie Adler)

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