With at least $1.3 billion invested globally in 2018, VC funding for blockchain blows past 2017 totals

Although bitcoin and blockchain technology may not take up quite as much mental bandwidth for the general public as it did just a few months ago, companies in the space continue to rake in capital from investors.

One of the latest to do so is Circle, which recently announced a $110 million Series E round led by bitcoin mining hardware manufacturer Bitmain. Other participating investors include Tusk VenturesPantera CapitalIDG Capital PartnersGeneral CatalystAccel PartnersDigital Currency GroupBlockchain Capital and Breyer Capital.

This round vaults Circle into an exclusive club of crypto companies that are valued, in U.S. dollars, at $1 billion or more in their most recent venture capital round. According to Crunchbase data, Circle was valued at $2.9 billion pre-money, up from a $420 million pre-money valuation in its Series D round, which closed in May 2016. According to Crunchbase data, only Coinbase and Robinhood — a mobile-first stock-trading platform which recently made a big push into cryptocurrency trading — were in the crypto-unicorn club, which Circle has now joined.

But that’s not the only milestone for the world of venture-backed cryptocurrency and blockchain startups.

Back in February, Crunchbase News predicted that the amount of money raised in old-school venture capital rounds by blockchain and blockchain-adjacent startups in 2018 would surpass the amount raised in 2017. Well, it’s only May, and it looks like the prediction panned out.

In the chart below, you’ll find worldwide venture deal and dollar volume for blockchain and blockchain-adjacent companies. We purposely excluded ICOs, including those that had traditional VCs participate, and instead focused on venture deals: angel, seed, convertible notes, Series A, Series B and so on. The data displayed below is based on reported data in Crunchbase, which may be subject to reporting delays, and is, in some cases, incomplete.

A little more than five months into 2018, reported dollar volume invested in VC rounds raised by blockchain companies surpassed 2017’s totals. Not just that, the nearly $1.3 billion in global dollar volume is greater than the reported funding totals for the 18 months between July 1, 2016 and New Year’s Eve in 2017.

And although Circle’s Series E round certainly helped to bump up funding totals year-to-date, there were many other large funding rounds throughout 2018:

There were, of course, many other large rounds over the past five months. After all, we had to get to $1.3 billion somehow.

All of this is to say that investor interest in the blockchain space shows no immediate signs of slowing down, even as the price of bitcoin, ethereum and other cryptocurrencies hover at less than half of their all-time highs. Considering that regulators are still figuring out how to treat most crypto assets, massive price volatility and dubious real-world utility of the technology, it may surprise some that investors at the riskiest end of the risk capital pool invest as much as they do in blockchain.

Notes on methodology

Like in our February analysis, we first created a list of companies in Crunchbase’s bitcoin, ethereum, blockchaincryptocurrency and virtual currency categories. We added to this list any companies that use those keywords, as well as “digital currency,” “utility token” and “security token” that weren’t previously included in the above categories. After de-duplicating this list, we merged this set of companies with funding rounds data in Crunchbase.

Please note that for some entries in Crunchbase’s round data, the amount of capital raised isn’t known. And, as previously noted, Crunchbase’s data is subject to reporting delays, especially for seed-stage companies. Accordingly, actual funding totals are likely higher than reported here.

Shared housing startups are taking off

When young adults leave the parental nest, they often follow a predictable pattern. First, move in with roommates. Then graduate to a single or couple’s pad. After that comes the big purchase of a single-family home. A lawnmower might be next.

Looking at the new home construction industry, one would have good reason to presume those norms were holding steady. About two-thirds of new homes being built in the U.S. this year are single-family dwellings, complete with tidy yards and plentiful parking.

In startup-land, however, the presumptions about where housing demand is going looks a bit different. Home sharing is on the rise, along with more temporary lease options, high-touch service and smaller spaces in sought-after urban locations.

Seeking roommates and venture capital

Crunchbase News analysis of residential-focused real estate startups uncovered a raft of companies with a shared and temporary housing focus that have raised funding in the past year or so.

This isn’t a U.S.-specific phenomenon. Funded shared and short-term housing startups are cropping up across the globe, from China to Europe to Southeast Asia. For this article, however, we’ll focus on U.S. startups. In the chart below, we feature several that have raised recent rounds.

Notice any commonalities? Yes, the startups listed are all based in either New York or the San Francisco Bay Area, two metropolises associated with scarce, pricey housing. But while these two metro areas offer the bulk of startups’ living spaces, they’re also operating in other cities, including Los Angeles, Seattle and Pittsburgh.

From white picket fences to high-rise partitions

The early developers of the U.S. suburban planned communities of the 1950s and 60s weren’t just selling houses. They were selling a vision of the American Dream, complete with quarter-acre lawns, dishwashers and spacious garages.

By the same token, today’s shared housing startups are selling another vision. It’s not just about renting a room; it’s also about being part of a community, making friends and exploring a new city.

One of the slogans for HubHaus is “rent one of our rooms and find your tribe.” Founded less than three years ago, the company now manages about 80 houses in Los Angeles and the San Francisco Bay Area, matching up roommates and planning group events.

Starcity pitches itself as an antidote to loneliness. “Social isolation is a growing epidemic—we solve this problem by bringing people together to create meaningful connections,” the company homepage states.

The San Francisco company also positions its model as a partial solution to housing shortages as it promotes high-density living. It claims to increase living capacity by three times the normal apartment building.

Costs and benefits

Shared housing startups are generally operating in the most expensive U.S. housing markets, so it’s difficult to categorize their offerings as cheap. That said, the cost is typically lower than a private apartment.

Mostly, the aim seems to be providing something affordable for working professionals willing to accept a smaller private living space in exchange for a choice location, easy move-in and a ready-made social network.

At Starcity, residents pay $2,000 to $2,300 a month, all expenses included, depending on length of stay. At HomeShare, which converts two-bedroom luxury flats to three-bedrooms with partitions, monthly rents start at about $1,000 and go up for larger spaces.

Shared and temporary housing startups also purport to offer some savings through flexible-term leases, typically with minimum stays of one to three months. Plus, they’re typically furnished, with no need to set up Wi-Fi or pay power bills.

Looking ahead

While it’s too soon to pick winners in the latest crop of shared and temporary housing startups, it’s not far-fetched to envision the broad market as one that could eventually attract much larger investment and valuations. After all, Airbnb has ascended to a $30 billion private market value for its marketplace of vacation and short-term rentals. And housing shortages in major cities indicate there’s plenty of demand for non-Airbnb options.

While we’re focusing here on residential-focused startups, it’s also worth noting that the trend toward temporary, flexible, high-service models has already gained a lot of traction for commercial spaces. Highly funded startups in this niche include Industrious, a provider of flexible-term, high-end office spaces, Knotel, a provider of customized workplaces, and Breather, which provides meeting and work rooms on demand. Collectively, those three companies have raised about $300 million to date.

At first glance, it may seem shared housing startups are scaling up at an off time. The millennial generation (born roughly 1980 to 1994) can no longer be stereotyped as a massive band of young folks new to “adulting.” The average member of the generation is 28, and older millennials are mid-to-late thirties. Many even own lawnmowers.

No worries. Gen Z, the group born after 1995, is another huge generation. So even if millennials age out of shared housing, demographic forecasts indicate there will plenty of twenty-somethings to rent those partitioned-off rooms.

Why the NAFTA talks won’t end any time soon: Kevin Carmichael

In hindsight, it was clear something had gone askew with the NAFTA talks the moment Canadian officials got excited about wrapping things up.

Prime Minister Justin Trudeau and his ambassador to the U.S., David MacNaughton, spent the first part of Thursday telling people that an agreement was close. Trudeau even said the compromise that had been worked out automobiles likely would result in jobs returning to America from Mexico.

You got the impression that if President Donald Trump’s motorcade had showed up in New York, where Trudeau was speaking, he would have signed a new NAFTA right there on the hood of the president’s Suburban.

All this commentary was happening on the day that House Speaker Paul Ryan had set as the deadline if negotiators wanted Congress to approve an agreement before the end of the year — and before November midterm elections flip the House of Representatives to a Democratic majority in 2019 (according to current polling).

No one took Ryan’s timeline seriously, including Ryan himself, who would eventually concede that the deadline to satisfy all of Congress’s procedural hurdles was actually sometime in early June.

But that didn’t stop Canada’s leaders from using the opportunity to put some pressure on Trump. The gambit probably was worth a try, but it came off as odd, at least to this observer. The Canadian strategy had been to fake indifference about timing. Foreign Affairs Minister Chrystia Freeland has stated repeatedly that the only thing she cares about is getting a “good deal.” The decision to jump on the Ryan deadline suggests the Trudeau government is in fact aware of the Bank of Canada’s estimates of how much trade uncertainty is hurting investment.  

It turns out that Freeland’s willingness to negotiate for as long as it takes is going to be tested. Robert Lighthizer, the U.S. trade representative, was busy negotiating with a delegation of high-ranking Chinese most of Thursday. But when he emerged from those meetings, he quickly sent a message to the Canadian front in this ever-expanding trade war. “The NAFTA countries are nowhere near close to a deal,” he said in statement emailed to reporters by his press office. “There are gaping differences on intellectual property, agricultural market access, de minimis levels, energy, labor, rules of origin, geographical indications, and much more.”

And with that, everything changed. Gone was the notion that Trump could be persuaded to accept a moderately reworked NAFTA and call it a win. Lighthizer’s statement showed that if he has his way, Canada, Mexico and the U.S. will be reworking NAFTA from top to bottom. That easily will push negotiations into 2019.

“I don’t see any evidence of this being wrapped up,” said Eric Miller, a Canadian trade consultant based in Washington. “You can’t have a comprehensive deal done quickly.”

Importantly, few think NAFTA is in mortal danger. Trump has stopped threatening to kill it and Lighthizer emphasized that he remained keen to negotiate, despite his many misgivings. But many who had hoped for a resolution this year were changing their timelines by the end of the week. Kevin Brady, the Republican chairman of the House committee that oversees trade policy, said in a statement Friday that he hoped the three NAFTA partners “continue working in good faith to get this done — whether that means a vote in Congress this year or next.”

A protracted negotiation means trade uncertainty will remain a headwind for Canada’s economy. The Bank of Canada has been trying to offset that drag on growth by keeping interest rates low, but Trudeau and the premiers are going to have to do more to help.

New figures show inflation is running at the central bank’s target, meaning it will have to gradually move borrowing costs higher to keep a lid on prices. If NAFTA isn’t settled in the next few weeks, Ottawa and the provinces should cut taxes on business investment to erase any U.S. advantage.

There’s a silver lining.

Faced with artificial time constraints, the best Canada could do was play defence and hope to limit the damage. But If Lighthizer truly wants to rewrite NAFTA, he will have to drop his bully act and allow Canada and Mexico some wins, too. That could be a net positive, assuming the Trudeau government seeks concessions that will benefit the Canadian economy a decade from now, and ignores the lobbyists attached to shrinking industries.  

That will be hard. The advantage those shrinking industries’ lobbies have is they employ taxpaying voters here in the present. However, the future isn’t as uncertain as it might seem.

Meredith Lilly, a professor of international affairs at Carleton University who served as a trade adviser to former prime minister Stephen Harper, argues in a new research paper that Canada can make a reasonable guess at its destiny on the continent by looking at demographics. In 25 years, we will be sharing a continent with two of the world’s 10 biggest economies. That’s reasonably good news. The bad news is that Canada’s economy will shrink, raising the possibility that we could become the poor cousins of North America.

To avoid that fate, Lilly says Canadian trade negotiators need to structure NAFTA in a way that will play to a future Canada’s strengths. There is little reason to think Canada can compete as a manufacturer, but it is having success in attracting tech companies desperate for talent. That means a win for Canada at NAFTA would be securing the ability to move people across the borders relatively easily so the country is a magnet for tech workers and students.

With all the emphasis on autoworkers, the NAFTA talks to date have been more about the past. Now that the window for a quick deal has closed, maybe we can start debating the future.     

• Email: kcarmichael@nationalpost.com | Twitter: CarmichaelKevin

Bets on Bank of Canada rate hike this month plunge after today’s data

Canada’s economy continues to show signs of strength, but not enough to fuel inflation and prompt aggressive rate hikes — a scenario that validates the Bank of Canada’s cautious stance on monetary policy.

Inflation figures Friday by Statistics Canada showed few signs of any sharp pick-up in price pressures even as the economy operates near its full capacity and gasoline prices are rising. A separate retail sales report showed signs of life from consumers, who had been scaling back recently. The pair of releases adds to a run of data — including an unexpected jump in both imports and exports — that underscore demand remains solid.

Robust growth accompanied by benign underlying inflation marks a progression for the economy that reinforces expectations Bank of Canada policy makers will move ahead with more interest rate increases, but only gradually. After three hikes since July, investors are anticipating two more increases this year: in July and October.

“They would say things are pretty much unfolding as expected,” Mark Chandler, head of fixed income research at RBC Capital Markets in Toronto, said by phone. “You don’t accelerate the time table, you don’t push it back, you just follow through on it.”

Friday’s inflation data showed the consumer price index rising at an annual pace of 2.2 per cent in April, down from 2.3 per cent in March. A narrower gauge of core prices closely tracked by the central bank was little changed at 2 per cent.

Retailers, meanwhile, recorded their largest sales gain in five months in March as the nation’s households continued their car-buying binge.

The Canadian dollar fell on the data, trading down 0.5 per cent to C$1.2877 per U.S. dollar at 11:45 a.m., largely due to investors paring down bets on a move at the next rate announcement May 30. The implied odds of a hike this month are now 28 per cent, versus nearly 40 per cent Thursday.

“The odds of a May rate hike were scaled back notably in the wake of the data — perhaps reflecting the fact that the previous pricing required a very strong set of figures today, and that didn’t happen,” Doug Porter, chief economist at Bank of Montreal, said in a note to investors.

After a slowdown that began in the second half of last year, most economists are anticipating growth will return to an above 2-per cent pace in coming months and continue to put pressure on Bank of Canada Governor Stephen Poloz to raise interest rates. A slump in first-quarter growth is also turning out to be less severe than initially feared. The economy probably expanded at just under 2 per cent in the first three months of 2018, better than the 1.3 per cent predicted by the central bank last month.

Statistics Canada will release first-quarter GDP data on May 31, the day after Poloz’s rate decision. At the bank’s last rate decision April 18, officials reiterated they are in no rush to thwart the current expansion with aggressive rate hikes, particularly when plenty of headwinds remain such as uncertainty on global trade policy and the future of the North American Free Trade Agreement.

Bloomberg.com

Equity podcast: Circle raises $110, VCs hunt liquidity, and the Vision Fund’s possible twin

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.

Today Matthew Lynley, Connie Loizos and I were joined by Semil Shah, the founder of seed-stage fund Haystack and venture partner at Lightspeed.

This week, we stuck to our roots: big rounds, venture capital liquidity thirst, one IPO, two Vision Funds, and three scooter jokes. Maybe more than three, but who is counting.

First up we took on Circle’s new $110 million round, working to understand why the firm is raising new capital at such a huge valuation (~$3 billion!). Also in play: Circle’s new lead investor isn’t a venture capital shop, making the monetary infusion all the more interesting. (Oh, and here’s more on the Basis stable coin we brought up.)

Next, we chatted through NEA’s plan to raise a fresh $1 billion to buy a lot of its stakes in startups that have yet to find an exit, allowing it, presumably, to return a chunk of capital to its own investors. The move is potentially fraught with conflict, we think, but perhaps it’s also the way of the future.

After that, it was time for an IPO break. Lynley had just got off the horn with the CEO we went through Pluralsight’s IPO that priced on Wednesday and started trading on Thursday. Short version: it went well.

Capping off this particular episode was a rundown of the potential for a new Softbank Vision Fund. What’s better than raising a half-squillion dollars? Raising a full squillion dollars.

So drink up, tech world. There’s still plenty of money to go around.

Equity drops every Friday at 6:00 am PT, so subscribe to us on Apple PodcastsOvercast, Pocket Casts, Downcast and all the casts.

‘Submission’ strategy not working for Trump as NAFTA talks drag on

House Speaker Paul Ryan was once described as a Republican “young gun.” These days, he fires blanks.

Ryan told the the men and women negotiating the North American Free Trade Agreement that if they wanted legislative approval this year, then he would need something by May 17. Everyone in Washington, Ottawa, and Mexico City essentially ignored him. The Trump administration spent the day negotiating with China, not Canada and Mexico, while officials from those two countries continued to insist they felt no pressure to rush.

The failure of Ryan to speed up the NAFTA talks suggests President Donald Trump has decided he wants to fundamentally overhaul of the agreement, and won’t settle for cosmetic changes. That could mean the Trump administration becomes more open-minded, as a top-to-bottom reworking of the agreement will require lots of give and take. But it also would drag out the uncertainty around trade rules that is hurting investment in both Canada and Mexico.

A simpler deal appears to be on the table if the president wants to take it.

David MacNaughton, Canada’s ambassador to the U.S., told reporters in Washington that they were close on a new set of rules that would address Trump’s concerns about his country’s trade deficit in automobiles and parts. And Prime Minister Justin Trudeau said in New York that he was optimistic a deal will be done, despite the missed deadline.

“We’re down to a point where there is a good deal on the table,” Trudeau said. “We know that those last conversations in any deal are extremely important, so I’m feeling positive about this, but it won’t be done until it’s done.”

Some observers said Ryan’s timeline was getting too much attention.

He is a spent force politically; he announced earlier this year that he wouldn’t be seeking re-election, blunting his influence.

Still, he understands what is required for bills to become laws. Congress is blocked from making changes to the final text, but the review process is legislated to last for about six months. Some say that means the deadline for congressional approval really is early June. The problem with that assertion is that it assumes everything would go smoothly.

Ryan’s timeline allowed for some flexibility, arguably a wise thing given Washington’s penchant for gridlock since about 2010. As his deadline passed, he conceded there might in fact be time to approve an agreement this year if negotiations concluded over the next couple of weeks. It would depend on how quickly the U.S. International Trade Commission completed its mandated review of the revised text, he said.

It may no longer matter.

The focus on resolving the Trump administration’s issues with NAFTA relatively quickly is desirable from the perspectives of Canada and Mexico because the uncertainty around trade is causing them to lose out on investment.

Yet the Canadians and Mexicans insisted they had no deadlines. It was U.S. Trade Representative Robert Lighthizer who was pushing to conclude negotiations before the 2018 election calendar introduced political risk.

Mexicans will elect a new president in July and polls suggest the House will flip to a Democratic majority after the November midterms. An agreement completed soon theoretically could be decided by legislatures over which the current leaders of Mexico and the U.S. have some influence.  

But what if Lighthizer no longer cares about the timing?

Eric Miller, a Canadian trade consultant based in Washington, said he thinks the Trump administration is beginning to understand that its initial approach to trade negotiations has failed.

Trump, Lighthizer and others said repeatedly that they believed they could squeeze concessions out of the U.S.’s trading partners simply by threatening to restrict their access to the world’s biggest economy.

Lighthizer’s strategy in the NAFTA talks has been to force the consideration of a long list of difficult demands under strict time constraints, betting that Canada and Mexico would cave. It hasn’t worked. Several artificial deadlines have been missed because Canadian and Mexican negotiators refused to make serious concessions until Lighthizer made some, too.

“The Trump negotiating style of maximum pressure has failed,” said Miller. “It was never about bargaining. It was about submission.”

There does appear to have been a shift in the U.S. approach. Last month, I was told by someone with knowledge of the Trump administration’s NAFTA strategy that it was ready to give up most of its demands and retreat. The focus was shifting to China and the feeling in Washington was that Lighthizer wanted to focus on the bigger opponent.

But over the last week or so, there have been more reports of the Americans complaining about Canadian and Mexican intransigence around issues such as drug patents and the U.S.’s desire to insert a sunset clause.

This suggests that Lighthizer is repositioning for a more normal negotiation. The good news would be that the U.S. would probably be willing to grant Canada and Mexico some wins in order to achieve its priorities. The bad news is that talks quite likely will drag into 2019.

“He wants to renegotiate the agreement from top to bottom,” said Miller. “You can’t have a comprehensive deal done quickly.”

• Email: kcarmichael@nationalpost.com | Twitter:  

Argentina’s woes ‘may be tip of the iceberg’ of an even bigger crisis for world economy

LONDON — The dramatic events in Argentina may be the “tip of the iceberg” of a broader systemic crisis across Asia, Latin America and Africa, the top emerging market watchdog has warned.

The Institute of International Finance says powerful contractionary forces are coming to bear as the U.S. Federal Reserve tightens monetary policy, draining dollar liquidity and lifting borrowing costs for much of the world economy.

“Rising global interest rates beg the question whether Argentina is an idiosyncratic case or a harbinger of things to come. We worry it might be the latter,” said Robin Brooks, the IIF’s chief economist.

What has raised alarm bells is the 5.5 per cent rise in the U.S. dollar index (DXY) since mid-February, a delayed reaction as the Fed reverses quantitative easing and signals a series of staccato rate rises. A stronger dollar automatically squeezes the international financial system, often through complex hedging contracts that are poorly understood.

The Bank for International Settlements estimates that offshore US dollar debt has exploded to US $11.8 billion, with a further US$14 trillion of “equivalent” liabilities hidden in derivatives. This volume is unprecedented.

The IIF suggested that the current situation may be more dangerous than the “taper tantrum” in 2013 when the “fragile five” emerging markets — then India, Brazil, Turkey, South Africa and Indonesia — were forced to take drastic action to defend their currencies.

“Even though the underlying shock this time is smaller — the rise in long-term yields this year is roughly half that in mid-2013 — many emerging market currencies have weakened as much as or more than in 2013, a sign to us that vulnerability to rising global rates is high,” said Brooks.

Alastair Wilson, director of global ratings at Moody’s, said worries are rising as a string of states fail to get a grip on leverage. “Debt remains extremely high by historic standards. Significant ‘event risks’ are looming in the background,” he said. Moody’s said capital outflows from Asia over the last month have already been roughly half the pace of the taper tantrum, with the frontier markets most exposed. Mongolia must roll over its entire debt stock (80 per cent of GDP) within three years. The agency has already downgraded 20 sub-Saharan countries in Africa, compared to just two upgrades.

Mauro Leos, Latin America chief at Moody’s, said Argentina was first in the firing line because of its unsustainable “twin deficits,” with the current account gap ballooning to 5 per cent of GDP. Foreign direct investment covers only a third of this funding need. The rest has to come from capital inflows. Foreign exchange reserves were too thin to ride out the storm.

This left the country vulnerable to a “sudden stop” if confidence snapped, which is what happened when the Macri administration bullied the central bank into cutting interest rates in January — despite surging inflation.

“The message is don’t mess with central banks,” said Leos, speaking at a Moody’s forum in London.

The peso has fallen by 22 per cent against the US dollar so far this month. It is a debacle painfully familiar for long-suffering Argentines. The central bank has had to raise rates to 40 per cent. It is rapidly burning reserves trying to defend an arbitrary exchange line of 25 pesos to the dollar.

Credit default swaps measuring risk on Argentine debt have continued rising to 450 basis points despite the decision by president Mauricio Macri to request a US$30 billion “flexible credit line” from the International Monetary Fund, a hated body in the country. Negotiations may take months, leaving the door open for capital flight.

William Jackson from Capital Economics said Turkey’s reliance on external finance exceeds that of Argentina.

Banks have been drawing heavily on the wholesale capital markets to fund a frothy credit boom, raising “roll-over risk” if capital flows freeze up. Foreign debt exceeds 50 per cent of GDP.

President Recep Tayyip Erdogan said defiantly this week that he will continue forcing the central bank to hold down interest rates if he wins re-election in June. This will drive the overheating economy towards an inflationary blow-off. The lira weakened a further 2.4 per cent to a record low of 4.47 against the dollar after he spoke.

Capital Economics said Brazil, South Africa and a long list of countries may have to keep rates higher than they would otherwise like as the US tightens, with even Romania and Chile looking stretched. The emerging market universe is already growing more slowly. China is coming off the boil. Global trade volumes have slipped.

The fate of debtor states now hinges on the dollar. If the DXY rally fades, it will take some pressure off the most vulnerable, although it will not stop their borrowing costs rising. There is no sign of such relief yet.

The last time US monetary tightening rattled global markets was during the Chinese currency wobble in late 2015 and early 2016.

The circuit-breaker in that episode was a sudden pirouette by the Yellen Fed. It retreated from planned rate rises and rescued China at a delicate moment.

The new Fed chairman Jay Powell is less inclined to mercy. In a speech earlier this month he insisted — to general consternation — that “corporate debt at risk” in China and other developing countries was a diminishing problem, and that improvements to fiscal and monetary regimes shielded many from an external shock.

The Daily Telegraph

No NAFTA deal this week, no NAFTA deal this year, Congress warns

WASHINGTON — The United States congressional leadership has indicated that it will not deal with a vote on NAFTA this year unless it sees the text of an agreement by the end of this week.

That statement Wednesday by the top member of the House of Representatives illustrated the stakes for the coming days: either the countries strike a deal now, or the process will drag into next year.

By next year, Mexico will have a new president, senior members of the U.S. Congress will have retired, midterm elections will have been held and the next U.S. Congress could have different priorities, adding new variables into the process.

House Speaker Paul Ryan was adamant when asked whether the procedural rules of U.S. trade law require a text this week in order for there to be a vote by the time the current Congress wraps up in December.

“Yes,” Ryan replied.

“This isn’t my arbitrary deadline, that’s just the way the (fast-track trade) law works.” Ryan pointed out that he’s intimately familiar with the workings of that 2015 law: “I wrote it.”

As it stands, the countries have one major issue in the talks nearly settled: autos. But other irritants like dairy, dispute-settlement rules, pharmaceuticals and public contracts continue to linger.

Prime Minister Justin Trudeau this week told President Donald Trump that a new NAFTA is within reach, if the U.S. is willing to soften some of its other demands.

Another big irritant is the five-year sunset clause proposed by the U.S. It’s a unique provision that would end NAFTA after five years, unless all parties agree to extend the deal.

Several speakers at a Washington event on Wednesday blasted the idea, including a Republican, a Democrat and two Canadians.

The criticism was expressed in especially blunt terms by Canadian MP Wayne Easter.

“This idea of a five-year sunset clause is absolutely crazy,” the P.E.I. Liberal told a panel event near Capitol Hill.

“I’ll call it as it is: it’s a stupid idea.”

Speaking at an event organized by the Canadian American Business Council, during a visit to Washington by a delegation of Canadian parliamentarians, the former dairy farmer also dismissed U.S. demands for an end to Canada’s supply management policy for dairy products.

He said supply management provides stability for a sensitive commodity, avoiding either over- or under-supply and catastrophic price swings: “Your dairy industry problem in the United States is not Canada,” Easter said. “Your dairy industry problem is yourselves in the United States. You’re producing too much product.”

Kirsten Hillman, Canada’s deputy ambassador to Washington, spoke earlier at the same event and also questioned the logic of the sunset clause, although she did so in more diplomatic language.

A former senior Canadian trade negotiator, Hillman said a trade agreement has two purposes — liberalizing trade and providing certainty. She said a five-year sunset accomplishes neither.

“We set out these agreements and lock them down in international law, so that they survive from one government to the next, from one administration to the next, to allow our businesses to plan,” Hillman said.

“A proposal that would automatically terminate the agreement every five years runs directly counter to that fundamental principle of a trade agreement. So that’s not a proposal that makes sense for Canada.”

She said Canada is willing to keep talking after this week, as is Mexico, but she conceded that time is running out to have an agreement negotiated, voted on and implemented by the current U.S. Congress.

“The runway for this Congress is very short,” Hillman said. “(But) not impossible.”