Walmart is buying Cornershop, which offers deliveries in Mexico and Chile, for US$225 million. The deal, one of Walmart’s various global investments and tie-ups geared at helping the retailer compete with Amazon.com, is slated to close by year’s end.

In the U.S., Walmart is the largest seller of groceries but grapples with the challenge of swiftly delivering fresh food to the homes of online customers. The company has promised to make such deliveries in 100 U.S. cities by the end of 2018 and so far covers nearly 50 markets.

In a race to meet its goal, the company is working with several small delivery companies including Doordash and Postmates after ditching partnerships with ride-share companies Uber and Lyft.

Cornershop chief technology officer Daniel Undurraga said in an interview on Tuesday that Cornershop plans to launch in Toronto in the first quarter next year. If it does well, Vancouver and Montreal would follow.

If Canada is successful overall, Undurraga said, the U.S. could be the next target.

“Canada is a good test market for launching a service in the U.S. It is very similar, but smaller,” he said.

Walmart did not immediately respond to a request for comment. Judith McKenna, chief executive of Walmart International, said in September that Cornershop was expected to provide a learning experience for Walmart’s markets beyond Mexico and Chile.

An English-language version of the app will roll out within a month as part of preparation for the Canada launch, Undurraga said.

Cornershop still needs to partner with a local payments company and recruit workers in Canada. About 11,000 people currently work for Cornershop across 11 cities in Mexico and Chile.

Apart from Walmart the platform also offers deliveries from various retailers, including Costco Wholesale Corp. and Mexican chains Chedraui and La Comer. Undurraga said Cornershop is building firewalls so that Walmart cannot access customer data from other stores.

The company will also consider raising delivery fees to account for higher labour costs in Canada and the U.S. Cornershop generates other revenue through advertising, commissions from retailers and price mark-ups.

The technology, however, is already in place.

“We have our own tools for being able to do this without a lot of effort,” Undurraga said.

— Daina Beth Solomon reports on retail and e-commerce for Reuters from Mexico City; additional reporting by Nandita Bose in New York.

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A U.S. source familiar with the discussions in Washington said it was still unclear whether the two sides could bridge their gaps or whether U.S. President Donald Trump will opt for a Mexico-only bilateral trade deal.

“We’re down to three issues: Chapter 19, the cultural issues and dairy. We’ve created leverage and driven Canada to the table,” the source said. “Part of our problem is that Canada has been backsliding on its commitments (on dairy).”

Trump has set a deadline for a deal this week, prompting aides to U.S. Trade Representative Robert Lighthizer and Canadian Foreign Minister Chrystia Freeland to work late into the evening to find ways to move forward.

Freeland kept up her positive talk about the discussions for a second day in a row, saying that the discussions were “constructive and productive.”

“The atmosphere continues to be good. There is goodwill on both sides,” she said following a meeting with Lighthizer, adding that officials on both sides would continue with detailed discussions.

She declined to discuss specific issues under negotiation.

U.S. House ways and means chairman Kevin Brady, a powerful voice in Congress on trade, told reporters on Thursday that differences remained between the two sides over Canada’s dairy quota regime and a trade dispute resolution settlement procedure and “other longstanding issues.”

The Trump administration charges that Canada discriminates against its U.S. dairy exports. It also wants to end the Chapter 19 arbitration panels for resolving disputes over anti-dumping tariffs, something Canada has used to defend its lumber exports to the U.S., despite U.S. charges that Canadian lumber is unfairly subsidized.

“They are continuing to push toward a conclusion of that agreement. A depends on the seriousness of Canada in resolving these final disputes,” Brady told reporters after speaking with Lighthizer earlier on Thursday. “My sense is that everyone is at the table with the intention of working these last, always difficult issues out.”

The third unresolved issue is Canada’s insistence that previous NAFTA cultural exemptions protecting its publishing and media companies from being acquired by U.S. companies be preserved, with Prime Minister Justin Trudeau this week saying this was important to Canada’s national sovereignty and identity.

Lighthizer has referred to the exemptions as “cultural protectionism” as Canadian companies are free to buy U.S. media outlets.

Trump has threatened to push ahead with a bilateral deal with Mexico, effectively killing the three-country NAFTA pact, which covers US$1.2 trillion in trade.

The U.S. and Mexico reached an agreement on overhauling NAFTA at the beginning of last week, turning up the pressure on Canada to agree to new terms.

Trump said on Wednesday that he expected it to be clear whether there would be a deal to include Canada in a few days. The U.S.-Canadian talks resumed Wednesday after failing to reach a conclusion last Friday.

Canada also wants a permanent exemption from Trump’s steel and aluminum tariffs, and for Washington to eliminate the threat of U.S. auto tariffs.

But Freeland said the “Section 232” national security tariffs on metals were not part of the current NAFTA talks.

“Canada’s position on the 232 tariffs is unchanged. These tariffs are unjustified and illegal,” she said on Thursday.

Trump has claimed that the 1994 NAFTA pact has caused the loss of hundreds of thousands of U.S. jobs, something that most economists dispute.

Data released on Wednesday showed the U.S. trade deficit hit a five-month high of US$50 billion. The shortfall with Canada shot up 57.6 per cent.

Trump has notified Congress he intends to sign the trade deal reached last week with Mexico by the end of November, and officials said the text would be published by around Oct. 1.

Negotiators have blown through several deadlines since the talks started in August 2017. As the process grinds on, some in Washington insist Trump cannot pull out of NAFTA without the approval of Congress.

— Reporting for Reuters by Daina Beth Solomon and David Lawder; writing by David Ljunggren and David Chance; additional reporting by Chris Prentice in New York.

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