JWG via DTN 15 January 2023 JT and Rae have been reading the tar baby saga and are trying hard…
NAFTA Negotiations 2017-2018
NAFTA latest: U.S to bend on Chapter 19 in exchange for greater access for U.S. dairy, sources say
Prime Minister Justin Trudeau is now heavily involved in last-ditch efforts to conclude a NAFTA deal, with sources saying the Trump administration is ready to concede to Canada’s wish to keep Chapter 19′s dispute-settlement mechanism in place in exchange for greater access for U.S. dairy products.
The talks have taken on a frenetic pace over the last 24 hours with Jared Kushner, the son-in-law of President Donald Trump, pushing for a deal before Sunday’s deadline to start a 60-day countdown to a final revamped pact being signed by the end of November.
NAFTA’s future is uncertain, but here’s one plausible scenario
Negotiations might be about to go on hiatus…. until 2019, and separate U.S. deals with Canada and Mexico loom as a very possible outcome
(Maclean’s) … stipulating that there are too many political and policy variables to predict anything with much confidence, a Canadian official sketched the following scenario as one that’s emerging as a distinct possibility:
Trump delivers to Congress the text of his bilateral deal with Mexico as scheduled on or before Sept. 30, and soon after asks Congress to grant his administration new authority to negotiate a bilateral deal with Canada.
Congress takes the allotted 60 days to consider the U.S.-Mexico deal already finalized, and 90 days to study the Trump administration’s plan for bargaining toward a separate U.S.-Canada deal.
Assuming Congress accepts the U.S.-Mexico pact, Trump signs that deal with outgoing Mexican President Enrique Pena Nieto by late November, before Pena Nieto is succeed in December by Andres Manuel Lopez Obrador, the new Mexican president elected in July.
In early 2019, the U.S. Congress, likely reshaped by those midterm elections coming up in early November, takes up the work of ratifying the U.S.-Mexico deal. And, at roughly the same time, fresh Canada-U.S. talks pick up where this fall’s frustratingly inconclusive sessions left off.
That means ratification of the U.S.-Mexico deal and negotiation of a possible U.S.-Canada pact are happening in tandem, making it possible they could still be combined into a trilateral NAFTA 2.0. Another possibility: parallel bilateral trade deals between the U.S. and its two former NAFTA partners.
Will Congress accept that bilateral U.S.-Mexico deal, or insist on an agreement that includes Canada? [Colin] Robertson says Democrats fired up by the battle over Senate confirmation of Trump’s controversial Supreme Court nominee, Brett Kavanaugh, appear to be in no mood to give any Trump proposition—including the bilateral U.S.-Mexico deal—an easy ride. “To assume it’s a slam-dunk in Congress, I just think is wrong,” Robertson said. “That would be my read watching the Democrats over the last weeks.”
Canada returning to NAFTA talks earlier than expected
Chrystia Freeland will be in Washington Tuesday for more meetings with U.S. NAFTA negotiators
NAFTA decision makers stepped away from the talks on Friday, while lower-level technical negotiators from Canada and the United States continued to meet through the weekend.
Loosen grip on dairy sector to help NAFTA talks, New York Republican says
Republican Tom Reed, a member of the House ways and means committee, says in a television interview airing today that providing American dairy farmers with more access to the Canadian market may appease President Donald Trump.
Trump’s Fight With Canada Over Nafta Faces New Hurdles
(Bloomberg) Trump’s frustration spilled into the open over the weekend as he railed against Canada on Twitter — as well as its many supporters in both political parties. The president has threatened to leave Canada out of a new trade deal already negotiated with Mexico, but without congressional support he lacks leverage to force Ottawa to make concessions.
The problem for Trump is that U.S. business and farm groups as well as a broad bipartisan swath of legislators say they will oppose any deal that doesn’t include Canada. If the AFL-CIO’s opposition to a Nafta without Canada holds, it would leave Trump facing opposition by bosses, farmers, workers and politicians — every major constituency in American trade politics.
The Trump vitriol aimed at Canada over the weekend also put pressure on Trudeau not to bend to U.S. demands even if economists warn a collapse of Nafta could be very damaging to the Canadian economy.
As NAFTA talks set to resume, Americans appear split on moving forward without Canada
(Global) An online poll done last week by the American news website Axios asked 2,433 American adults about Donald Trump’s handling of the negotiations and found 50 per cent of respondents supported the proposed NAFTA replacement — details of which are not yet clear — while 43 per cent did not. As well, 49 per cent oppose going ahead with a renewed deal if it does not include Canada.
Derek Burney: Canada must learn from our history and stand firm on NAFTA
(Globe & Mail) The agreement with Mexico on autos is probably good for Canada as are many of the genuine, modernization elements (for example, digital commerce.) But to be negotiating with the threat of 25-per-cent tariffs on autos if we do not concede to all U.S. demands is odious. The chief executives of Detroit’s big three auto makers should explain bluntly to their President that such action would disrupt the efficiency of their integrated supply chains and raise the cost of cars for U.S. buyers.
Canada has already signalled a willingness to compromise modestly on other issues such as intellectual property and even on dairy products, but differences over the dispute settlement mechanism (of Chapter 19) remain as the single biggest obstacle to agreement.
Optics are important to Mr. Trump. As the Wall Street Journal observed recently, “if you give [him] an inch on trade, he will celebrate a mile.” Finding that inch without capitulating is the challenge for Canada. Time offers us some leverage and we should not be stampeded into a bad deal. Mr. Trump has already triggered the 90-day requirement for consultations with Congress with or without Canada.
Guy Stanley comments:
In my opinion, the issue goes beyond c.19. The Western alliance and its trade agreements are erected on a principle of mutuality, however much the US has since asserted a “command” position. Trump’s trade actions are trade illegal and his public bargaining approach is, well, insulting to the memory of Don Corleone. As a result of these tactics, the US is facing multiple trade actions at the WTO. Trump has already exposed his country to potential trade penalties of millions of dollars. No wonder he is threatening to leave the WTO. So much for a US support for a “rules-based” system. Trump and Bannon want a trading system based on bilaterals with trade surplusses for the US: what trading partners could agree to that? The news from the negotiators is a bit more reassuring – and the Canadian delegation has said they will not sign a deal that is bad for Canada. What is the need to do more than keep insisting that negotiations have to continue until such a point is reached? Let the US admin break off talks when they want and deal with the heat. Canada has plenty of ammunition to defend not only its own interests but also those of its US trading partners by sticking up for a deal based on reciprocity rather than unsubstantiated analysis and bullying.
On the details of the new agreement: the US position is one of withdrawing concessions and raising the price to be paid forin previous concessions without grounds. There is no news whether Canada is responding in kind or not. After all, in NAFTA and its predecessor we accepted US concepts of a “taking” in the investor dispute area, a mistake, and we gave them a guarantee on emergency access to Cdn oil. Are these still in the new arrangement? We are defensive on supply management, but is the US sticking to their ag subsidies? If they want managed trade in autos, what about softwood lumber? There is a dispute about IPR but what about data sharing and privacy? NAFTA is a complicated business that includes a lot more than just the issues around autos and dispute settlement. What is discouraging about the public comment is how little information we are getting about how its inter-related multi-dimensions are being re-related and on what basis. One assumes that the Canadians are patiently adjusting our concessions to conform to the new transatlantic treaty (which the US has already renounced.) and getting something for It from the other side. It would be nice to know for sure.
My end result is that I agree with Burney, but wish he had raised his reasoning to the level of alliance principles.
Donald Trump threatens to cancel NAFTA entirely if Congress interferes with his plans
Trump said there was ‘no political necessity’ to include Canada in a deal
(Financial Post) Trump notified Congress on Friday of his intent to sign a revamped deal in 90 days with Mexico — and Canada too, if Ottawa chooses to join in.
But on Saturday, Trump said there was “no political necessity” to include Canada in a deal, and suggested he would scrap NAFTA entirely rather than allowing it to continue in its current form.
Top trade official in Mexico’s new government says he wants Canada in any future deal – and Mexico did not sell Canada out
Jesus Seade Kuri, the chief trade negotiator in the government of incoming Mexican president-elect Andres Manuel Lopez Obrador, said he believes a NAFTA deal can still be reached – and that it is of critical importance to the incoming Mexican administration that Canada be part of any new pact – but he acknowledged that the atmosphere around the talks was fraught on Friday.
WSJ Editorial: No Nafta Redo Without Canada
Congress won’t pass a new deal if it excludes our northern neighbor
Canada ranked as the number one export market for no fewer than 33 U.S. states in 2016. That includes northern states that border Canada, but also Georgia, Alabama, Pennsylvania, Iowa and Tennessee, according to the Census Bureau. Those are all states Mr. Trump carried in 2016.
California’s biggest export market is Mexico, but it still sends a staggering $25.4 billion in goods and services to Canada in a year. About 1.2 million Golden State jobs rely on trade and investment with Canada, according to the Business Council of Canada. Michigan exports $24.6 billion north of the border, Texas $24.1 billion, Ohio $20.2 billion, New York $19.2 billion and Illinois $18.6 billion.
Canada, U.S. miss NAFTA deadline, talks to resume next week
(Global News) While the negotiations were private, U.S. Trade Representative Robert Lighthizer said Canada has made no concessions on the thorny issue of dairy supply management. Another sticking point appeared to be Trump’s comments implying the U.S. was not negotiating in good faith, when he said the negotiation was “totally” on U.S. terms. Bombshell Trump remarks leak and throw a last-minute wrench into NAFTA talks with Canada
Reuters morning round-up: Factbox: Winners and losers from the new NAFTA deal
Friday isn’t the real deadline for ‘NAFTA 2.0’
Trump’s push to get a deal with Canada by Friday is a negotiating tactic and attempt to move something before the new Mexican president takes office
(WaPost) On Friday, Trump plans to send a letter to Congress notifying it of an impending trade deal, which he’s terming a replacement for the North American Free Trade Agreement (new name to be determined). He wants to send a letter because it starts the clock on the 90-day notice that U.S. trade law requires Trump to give Congress before he can sign any agreement … he wants to get a deal done by Dec. 1. That’s when Mexican President Enrique Peña Nieto will step down to make way for President-elect Andrés Manuel López Obrador.
Canada, U.S. resume NAFTA talks amid growing optimism
(Reuters) – Canada has three days to tackle contentious issues when it resumes talks with the United States on Wednesday to salvage the trilateral North American Free Trade Agreement amid signs Ottawa was open to taking a more conciliatory approach.
Lawrence Martin: U.S.-Mexico NAFTA double-cross puts Canada on the defensive
Back in early June, a top Canadian trade negotiator told me bluntly that what he didn’t want was the United States doing a separate deal with Mexico on autos and then turning to Canada. Ottawa would then have lost leverage.
What happened was worse. The U.S.-Mexican pact is not just an agreement on cars but a trade package that, while not finalized, is comprehensive.
What happened was that Ottawa was deceived and double-crossed. While talks proceeded with Mexico, Canadian negotiators asked to be let in. The answer from U.S. Trade Representative Robert Lighthizer was “no.” The talks, he said, were only on differences particular to Mexico around auto manufacturing. No need for Canada’s presence.
Free trade talks could finally see Canada raise de minimis levels for duty-free online shopping
(CBC) The issue has been divisive in trade negotiations for years. In 2016 the U.S. raised its threshold to $800 from $200, even as NAFTA partners kept theirs right where they were.
Trump’s path to a new NAFTA deal runs through Canada, lawmakers say
(WaPost) Canadian officials, after being boxed out of talks for weeks, must decide quickly whether to sign on to a preliminary deal to alter the North American Free Trade Agreement that Trump has brokered with Mexican leaders. This would require Trudeau to set aside the string of Trump insults hurled at him several months ago when talks soured.
Trump said Monday that if Canada refuses to sign on to the new deal, he will terminate the NAFTA agreement and end Canada’s existing relationship with the United States.
A number of U.S. lawmakers believe that Trump’s approach is neither wise nor legal, potentially creating fresh hurdles. Congress must sign off on any trade deal before it can take effect.
Sen. John Cornyn (Tex.), the No. 2 Senate Republican, told reporters Tuesday that there would be “technical problems” with Congress voting on a bilateral Mexico-U.S. trade deal under fast-track procedures that were expected to apply to a trilateral NAFTA renegotiation. …
Trump’s NAFTA Strategy: Bluff, Rebrand, Declare Victory
The president’s announcement that he was “terminating” a free-trade agreement means less than he said.
(The Atlantic) “They used to call it NAFTA. We’re going to call it the United States–Mexico Trade Agreement, and we’ll get rid of the name NAFTA,” Trump said in the Oval Office, with Mexican President Enrique Peña Nieto on speakerphone. “It has a bad connotation because the United States was hurt very badly by NAFTA for many years.” (Peña Nieto, in his remarks, referred to the agreement as NAFTA.)
Trump announces separate U.S.-Mexico trade agreement, says Canada may join later
The deal is the most important result so far in a year-long effort to renegotiate NAFTA. But it leaves several controversial issues unresolved.
How Easily Could Trump Withdraw the U.S. From NAFTA?]
The legal procedure for an “Amerexit” isn’t as straightforward as Brexit
The even bigger picture is that this is just one part of the overall trade situation. NAFTA has lots of critics, and there are many changes that could be made to it to make it work better for Americans. Trump wasn’t wrong about that, even though he never seemed able to specify exactly what his complaint with the agreement was, other than his belief that it was the worst deal ever.
Nafta Talks Set to Run Into Next Week as Canada Sits on Sideline
Mexican minister says Canada needs to return to get agreement
Only way for Canada to return is to work weekend, next week
Globe & Mail daily Politics Briefing: The U.S. will be holding one-on-one talks with Mexico this week on free trade in North America, as the White House pushes for a deal. Mexican Economy Secretary Ildefonso Guajardo, who is the country’s lead official on the NAFTA file, will be in Washington to talk with U.S. Trade Representative Robert Lighthizer. The two also met last week. Foreign Affairs Minister Chrystia Freeland is flying to Singapore this week to meet with Southeast Asian leaders and has told the U.S. that she is prepared to go to Washington, but the U.S. has said it needs to focus on Mexico at the moment.
Mexico pushes for three-way NAFTA pact, says sunset clause is deal breaker
(Globe & Mail) The two Mexican government ministers responsible for NAFTA negotiations say they still regard Donald Trump’s insistence on a five-year termination clause in the accord as a deal breaker and emphasize they are only interested in a three-way deal involving Canada, the United States and Mexico.
1 – 2 July
Mexico’s newest president commits to renegotiating NAFTA
(Reuters via Global) Andres Manuel Lopez Obrador, said on Monday he will seek to remain in NAFTA along with the United States and Canada and that he respects the existing Mexican team renegotiating the trade pact.
Donald Trump, Justin Trudeau dig in for long trade fight over NAFTA
(Globe & Mail) U.S. President Donald Trump is laying the groundwork for a long trade battle with Canada, announcing he will not sign a new North American free-trade agreement ahead of the midterm elections in November.
NAFTA’s fate could change timing of 2019 federal election: expert
(Global news) An expert on Canada-U.S. relations says he could see Prime Minister Justin Trudeau triggering a federal election earlier than planned next year if the trade war with the United States continues to escalate and NAFTA falls to pieces.
See video NAFTA negotiations separate from tariff response, says Freeland
NAFTA talks to resume in summer: Canadian minister
US senators indicate support for renewing trade pact
(Mexico News Daily) The process to renegotiate the North American Free Trade Agreement (NAFTA) will resume over the summer, Canadian Foreign Affairs Minister Chrystia Freeland said this week.”
How Canada’s supply management system works
It’s been blamed for inflating food prices – but a lot of American producers wish they had something like it
… “This is one of the reasons we moved to a supply-managed system — government wanted to make farming sustainable on its own,” [Bruce Muirhead, a historian at the University of Waterloo,] writes in his research paper ‘Crying Over Spilt Milk‘.
The United States, in contrast, has largely maintained support for the farming sector through subsidies. So Americans foot the bill for farm supports indirectly, through the taxes they pay, while Canadians pay for those supports directly, through higher prices for supply-managed products.
Aaron Wherry: Freeland, NAFTA and the fate of the free world
Here’s where Freeland’s two biggest files – defending democracy and saving open trade – intersect
(CBC) On Wednesday night, in the capital of that “shining city on the hill,” Chrystia Freeland worried aloud about the fate of the free world.
In some way, small or large, that fate might be affected by what Freeland did on Thursday morning when, with American tariffs bearing down on the Canadian economy, she returned to the work of renegotiating NAFTA.
George Monbiot: Donald Trump was right. The rest of the G7 were wrong
In arguing for a sunset clause to the Nafta trade agreement, this odious man is exposing the corruption of liberal democracy
Perhaps predictably, he has been universally condemned for it.
His crime was to insist that the North American Free Trade Agreement (Nafta) should have a sunset clause. In other words, it should not remain valid indefinitely, but expire after five years, allowing its members either to renegotiate it or to walk away. To howls of execration from the world’s media, his insistence has torpedoed efforts to update the treaty.
Mexico Hits U.S. With Tariffs, Escalating Global Trade Tensions
(NYT) … further straining relations between the two countries as they struggle to rewrite the North American Free Trade Agreement.
The tariffs, which were announced last week, came into effect as the Trump administration threw yet another complication into the fractious Nafta talks.
Mexico’s list was designed to hit at parts of the United States represented by high-profile Republicans, Mexican officials have said, including steel from Vice President Mike Pence’s home state of Indiana, motorboats from Senator Marco Rubio’s Florida, and agricultural products from the California district of Representative Kevin McCarthy, the House majority leader.
Exclusive: Canada PM raps possible U.S. auto tariffs, says linked to NAFTA
(Reuters) – A move by the United States to explore tariffs on auto imports is based on flimsy logic and is part of the pressure from Washington to renegotiate the NAFTA trade pact, Canadian Prime Minister Justin Trudeau said on Wednesday.
In an interview with Reuters, Trudeau said that while U.S. President Donald Trump had raised the idea of auto tariffs, there was no guarantee they will happen.
Trudeau also predicted talk of the tariffs will likely disappear if slow-moving negotiations to update the North American Free Trade Agreement – currently stuck on autos issues – are successful.
Trump blasts ‘spoiled’ Canada and Mexico over NAFTA talks
White House launches investigation to determine if auto imports have hurt U.S. national security
(CBC) “NAFTA is very difficult. Mexico has been very difficult to deal with. Canada has been very difficult to deal with … but I will tell you that in the end we win,” Trump told reporters at the White House. “We will win, and we’ll win big.”
Later in the day, the U.S. Commerce Department launched a national security investigation into auto imports and whether they threaten the U.S. industry’s health and ability to develop new technologies.
NAFTA’s shadow looms over Trudeau’s latest visit to U.S.
PM delivers speeches and accepts an honorary degree – but he won’t be able to get away from trade questions
(CBC) The clock is about to run out on an unofficial NAFTA deadline, smack in the middle of Trudeau’s three-day U.S. visit. Congress has told American negotiators it needs a signed NAFTA agreement by May 17; otherwise it won’t be able to pass the deal during the current sitting.
Trudeau makes last-ditch pitch to Trump for early NAFTA deal
NAFTA math may not add up to more U.S. auto jobs
(Reuters) – Trump administration demands in NAFTA trade negotiations meant to push auto jobs back to the United States may not be enough to spark a shift in where automakers build cars and trucks.
… the Trump administration proposals could complicate matters for electric vehicles and self-driving cars automakers want to build in Mexico. The U.S. proposals call for 75 percent of an electric or autonomous vehicle’s value to be made within North America to avoid tariffs.
Since much of those vehicle’s value can come from batteries made overseas, that means automakers must make up for the content largely on the human side.
Scotia Economics: US House Speaker Paul Ryan made waves this past week when he spelled out what has been generally understood for some time. Ryan noted that in order to have the current Congress weigh in on NAFTA—during the ‘lame duck’ session in December after mid-terms but before a new Congress in January— a solid agreement is needed by Thursday May 17th. If not, then it would be up to the next Congress to take up in 2019. Our understanding of the timeframe derived from industry sources goes as follows and is base upon the requirements of the Trade Promotion Authority law:
• USTR Lighthizer must notify Congress 90 days before the US administration plans to sign a NAFTA 2.0;
• 60 days before signing, the agreement must be published;
• Following signing, the USTR has 60 days to lay out the specific changes in the laws that would be necessary to reflect NAFTA 2.0;
• 105 days ahead of signing NAFTA 2.0, the USITC has to issue an assessment of the economic effects of NAFTA 2.0.
Working through these and other timelines is how next Thursday is derived while allowing Congress several weeks to consider NAFTA 2.0 before voting on it in December. Key divisions appear to remain on issues such as auto content, sunset clauses, dairy marketing boards etc. All sides are attempting to put on constructive airs during the negotiations so as to head off the risk of an impulsive tweet or action that could work against everyone’s interests.
NAFTA deal not reached, Freeland says talks will persist for ‘as long as it takes’
(Global news) Senior American, Canadian and Mexican officials on Friday ended a week of talks without a deal to modernize NAFTA, agreeing instead to resume negotiations soon, ahead of a [May 17] deadline next week issued by U.S House of Representatives Speaker Paul Ryan.
After meeting for barely half an hour on Friday, the top Mexican and Canadian politicians involved in the talks to update the agreement made it clear that big differences remained.
Freeland gets briefing from U.S. lawmakers on tight window for passing NAFTA
Auto issues have U.S., Mexico at odds as U.S. trade czar Robert Lighthizer meets with Mexican counterpart
(CBC) Canada’s foreign minister got a detailed explanation Thursday about why there might only be a few days left to get a NAFTA agreement in 2018.
Chrystia Freeland attended a discussion with top U.S. lawmakers on Capitol Hill.
They included the speaker of the House of Representatives, Paul Ryan, and Kevin Brady, the chair of the House committee that oversees trade legislation.
They shared their view of the so-called fast-track law, which sets the rules for votes on trade deals.
NAFTA talks making ‘constant progress’ towards a deal, Freeland says
Officials from the three countries reconvened in the U.S. capital this week under serious deadline pressure: The United States is threatening to hit Canada and Mexico with hefty tariffs on steel and aluminum if there is no new North American free-trade agreement (NAFTA) by June 1. And Mr. Lighthizer wants talks to conclude by the end of next week so Congress can approve a revised deal this year.
At the centre of the talks is a U.S. demand to raise the amount of NAFTA zone content in North American-made vehicles from 62.5 per cent to 75 per cent and add several new rules, including a requirement that 70 per cent of all steel, glass and aluminum used in autos come from the NAFTA countries.
The most contentious U.S. proposal would require 40 to 45 per cent of the content to be made in factories where workers earn at least US$15 to US$17 an hour. Such a rule would discourage auto companies from investing in Mexico – where auto wages are closer to US$3 an hour – and create jobs in the United States and Canada. Only 15 per cent of that total could come from research and development, ensuring that factory jobs are steered back to the United States.
U.S. Standing Firm on Nafta Demands, Mexican Business Chief Says
(Bloomberg) Negotiators this week are trying to make progress on the most contentious issues, including dispute resolution, access to U.S. procurement deals, a proposal to require more auto manufacturing in North America, seasonal barriers to agriculture trade and a clause that would terminate Nafta after five years unless the nations agree to continue it. Meanwhile, Canada’s minister responsible for industry, Navdeep Bains, met with carmakers Friday and said he’s “cautiously optimistic” about progress made on the crucial auto issue.
Read more: These Are Five Sticking Points to a New Nafta Deal: QuickTake
Trump links US border wall to NAFTA renegotiation, warns Mexico ‘must stop drug, people flows’
President Donald Trump said Mexico must do more to stop the flow of drugs and people across its border, claiming the country is ridiculing U.S. weakness on the issue.
“They must stop … or I will stop their cash cow, NAFTA,” Trump tweeted
NAFTA countries ‘finally starting to converge’ on autos issue, Lighthizer says
(Globe & Mail) “The U.S. had a proposal, Canada had a proposal, and Mexico has been engaged on the issue. And I think we’re in a position where we’re finally starting to converge,” U.S. Trade Representative Robert Lighthizer told lawmakers in an update on NAFTA talks. “I think we’re in a pretty good place.” Mr. Lighthizer, the White House’s point man on trade, struck an optimistic tone but there are several tough U.S. demands still on the table. As part of the negotiations, the U.S. is looking to limit food label warnings. Health Canada has been working on overhauling the food labelling system to curb consumption of unhealthy foods by identifying which foods are high in sugar, sodium or saturated foot.
(NYT) If the Trump administration gets its way, a new Nafta would include provisions that block the governments of the U.S., Canada and Mexico from requiring warning labels on junk food. Our reporters saw confidential documents outlining the American position. Soda and fast food companies are pushing hard for such a measure. Health officials worry that it would impede international efforts to contain a growing obesity crisis.
NAFTA arbitrage trade sours as Trump directs fury at Canada
(Globe & Mail) Canada and the U.S. are at odds in roughly five core North American Free Trade Agreement disputes, with Trudeau and Trump speaking about the pact as recently as this week. Trump said in a March 10 speech that Canada has been “brutal” in trade with the U.S., about a month after Canadian Prime Minister Justin Trudeau said that his nation is prepared to walk away from Nafta discussions rather than accept “any old deal.”
The tensions have eased somewhat over the past few days, with Trudeau expressing confidence Wednesday that an agreement will ultimately be reached. Incoming White House economic adviser Larry Kudlow has been a staunch proponent of [the] accord, giving it a high-profile backer within Trump’s inner circle.
Trump says Canada and Mexico will escape new tariffs only after NAFTA concessions
Key U.S. lawmaker urges steel tariff exemptions for NAFTA allies
(Reuters) [Kevin Brady, chairman of the U.S. House of Representatives Ways and Means Committee, which has jurisdiction over U.S. trade policy] said on Sunday all fairly traded steel and aluminum, especially from Canada and Mexico, should be excluded from President Donald Trump’s proposed tariffs, as he sought to calm tensions at major trade talks in Mexico.
Trump’s announcement on Thursday has overshadowed the NAFTA meetings as automakers worry that more expensive imports could raise the cost of manufacturing in North America and U.S. farm groups fret over retaliatory measures.
‘Canadian team is absolutely furious’: Trump’s steel trade war threats sour NAFTA talks
Any hopes of substantial progress in talks to rework NAFTA have been crushed by Trump’s surprise tariff announcement
(Financial Post) It remains unclear whether the tariffs would apply to the United States’ partners under NAFTA, which together account for more than 1 trillion dollars worth of annual trilateral trade.
Canada, the biggest foreign supplier of steel and aluminum to the United States, quickly pledged to retaliate if necessary.
Expectations of progress at the seventh round in Mexico City had already been tempered by the conviction that major bones of contention were unlikely to be removed without the mediation of senior political figures involved in the sluggish process.
Lawmaker interest in NAFTA intensifies amid Trump moves
(The Hill) The three-nation trade agreement that has long come under fire from both parties is getting a rousing defense amid a push from the Trump administration to either renegotiate or scrap the deal altogether.
Business advocates of the 24-year-old deal between the United States, Canada and Mexico say lawmakers have become significantly more interested in the pact recently amid talks to update the deal despite President Trump’s threats to withdraw from the agreement.
John Murphy, senior vice president for international policy at the Chamber.. said that the consensus on Capitol Hill is to update the deal and avoid poison pills that could doom the pact.
Some progress at Montreal NAFTA talks, but patience running thin as ministers repeat themselves
(National Post) Despite harsh, but not unexpected, words from the U.S., the sixth round of negotiating was not without its moments of optimism
Canada and Mexico, at least, expect a late-February meeting in Mexico City. Lighthizer demanded progress before then, and though he didn’t commit to a “see you next month,” neither did he indicate any plans for withdrawal from the agreement.
Now being discussed are what Freeland is calling “creative” Canadian proposals to meet “unconventional” U.S. demands — a step down from the language she was using late last year to describe then-“unworkable” American requests for new rules of origin for automobiles, the dismantling of dispute settlement processes and a five-year sunset clause.
Canada sees ‘encouraging’ signs as U.S. set to reply to key NAFTA proposals
NAFTA renegotiations have reached a critical juncture, with Canada set to learn Monday whether the U.S. is willing to consider Ottawa’s proposed compromises on three of the most serious sticking points in the talks.
And Prime Minister Justin Trudeau is insisting that – despite his willingness to work with President Donald Trump on the pact – he is fighting for “a better deal” in the negotiations.
Canadian negotiators spent all last week presenting new ideas, meant to satisfy the Trump administration’s protectionist demands, at the sixth round of negotiations in Montreal. Their American counterparts appeared interested in the proposals, discussing them at length and asking questions, said sources with knowledge of the confidential discussions
But it will ultimately be up to U.S. Trade Representative Robert Lighthizer whether Washington will seriously negotiate over the proposals or reject them out of hand. It is the most crucial moment so far in the five-month-old talks – a test of whether the Trump administration is sincerely interested in cutting a deal or would rather shred the North American free-trade agreement.
Wilbur Ross accuses Trudeau of using Davos speech to up NAFTA pressure
Canada’s finance minister says they won’t stop talking about benefits of trade
U.S. Commerce Secretary Wilbur Ross took a shot at Prime Minister Justin Trudeau on Wednesday, accusing him of using his speech at the World Economic Forum a day earlier to apply pressure on the United States in the North American Free Trade Agreement re-negotiations.
Ross made the comments to reporters after arriving in Davos, Switzerland, for the forum.
In a speech Tuesday, Trudeau talked up Canada being part of a new Trans-Pacific Partnership with 10 other nations. The original TPP was scuttled after U.S. President Donald Trump withdrew his country from it.
In a question and answer period after his speech, Trudeau was asked if he thought the new TPP deal was so good that the U.S. would join.
“We’re working very hard to make sure our neighbour to the south recognizes how good NAFTA is,” Trudeau said with a chuckle. “And that it’s benefited not just our economy but his economy and the world’s economy.”
Ross said that Trudeau’s speech was designed “to put a little pressure on the U.S. in the NAFTA talks.”
Political posturing casts sour tone over Montreal NAFTA talks
Source dismisses reports that Canada is being obstructionist at the negotiating table
The Canadian Press reported that the Americans are not only frustrated with Canada over the lack of progress, but also the recent complaint made against the U.S. at the World Trade Organization.
A source with direct knowledge of the talks is fighting back against those claims, saying it is “nonsense” to suggest Canada is being obstructionist.
“Obviously, the unconventional proposals from the U.S. have been the core issues since round four, but it is clearly in their tactical interest to paint a different picture,” the source said, speaking on background.
“We’ve been first to the table from the start, and we continue to be very constructive, looking for ways to bridge gaps.”
A 7-step guide to what does, doesn’t happen if Trump starts NAFTA pullout
Montreal talks could signal beginning of the end for NAFTA
Canadian trade advisers fear Donald Trump is preparing to pull the plug
(CBC) “It’s not if but when he triggers the six-month withdrawal,” Rona Ambrose told CBC Radio’s The House on Friday.
“The longer we go with nothing accomplished the more we start to think that Trump’s likely scenario is he wants to be able to say ‘There’s no outcome, we’re not making any progress, we don’t have partners that are working well with us, we’re going to trigger the six-month withdrawal.'”
Threats from the U.S. president to pull out of the trade deal have circulated, but his administration is still subject to the clause that requires half a year’s notice before withdrawal.
Mexican Peso, Canadian Dollar Decline on U.S. Nafta Exit Risk
(Bloomberg) Both currencies pared losses after a White House official said there hasn’t been any change in Trump’s position on Nafta. The peso fell 0.5 percent to 19.3398 per dollar as of 3:33 p.m. in New York, after falling as much as 0.9 percent. The Canadian dollar slipped 0.6 percent to 1.2543 per dollar. Yields on Canadian government 2-year notes fell six basis points to 1.74 percent.
Canada believes there’s an increasing likelihood that Trump will give six-months’ notice to withdraw from the two-decade-old pact, according to two Canadian government officials who spoke on condition of anonymity. Canada is said to have begun preparing contingency plans for how to proceed if Trump gives a withdrawal notice, which isn’t binding and wouldn’t necessarily kill Nafta.
Brett House: NAFTA: Uncertainty to Persist Throughout 2018
Five ‘extreme’ NAFTA proposals by U.S. that Canada will not accept, according to our lead negotiator
If the Americans do trigger an exit, ‘we would have a number of contingency plans in place to ensure the impact is as modest as it can possibly be’
(National Post) Steve Verheul told a House of Commons committee Monday that Canada will not accept the most “extreme” demands coming from President Donald Trump’s administration, implying that his Mexican counterparts are of the same mind.
In some of the strongest language yet from a Canadian official, Verheul described how he sees five U.S. proposals, in particular, as potentially detrimental to the North American free trade zone.
These “wholly unworkable” and “damaging” proposals appear to have been brought forward without much analysis, Verheul said, and Canada has been trying to explain why the policies could result in auto manufacturers moving their operations offshore, to the detriment of North American jobs.
“We do feel that some of the U.S. proposals go exactly in that direction of worsening our competitiveness,” he said.
12 biggest losers in a NAFTA pullout? States that voted Trump, says U.S. Chamber
(National Newswatch) The U.S. Chamber of Commerce has stepped up its efforts to save the North American Free Trade Agreement amid threats of an American pullout, and its latest release shows the states exporting the most to Canada and Mexico in total dollars, or as a percentage of their overall global exports.
Trump won all 12 states: Michigan, Wisconsin, North Dakota, Texas, Missouri, Ohio, Iowa, Indiana, Arizona, Nebraska, Pennsylvania and North Carolina delivered more than half his electoral college votes.
“Ironically, those likely to suffer most would be midwestern industrial states, heartland farm states, and border states like Texas and Arizona — nearly all of which voted to elect President Trump.”
the Chamber of Commerce has begun organizing regular NAFTA events in an effort to save the agreement. The release projecting the states that would be hardest hit by withdrawal from NAFTA began by quoting a recent op-ed in The Wall Street Journal by the Chamber’s president.
“Imagine the scene: The U.S. unemployment rate is climbing. Crops in the heartland are rotting. Manufacturers are moving abroad. Consumer prices are rising,” it begins, quoting president Tom Donohue.
“That’s the picture painted (by NAFTA’s cancellation).”
Canada, Mexico try more flexibility as key NAFTA round opens
(Reuters) Canadian and Mexican officials initially indicated they would simply not discuss contentious U.S. proposals such as a five-year sunset clause, and boosting the North American content of autos to 85 percent from the current 62.5 percent.
The focus in Mexico City would be on making arguments to the U.S. side as to why their proposals as written would not work, a Canadian government source said.
Canada, Mexico forming alliance against U.S. protectionist approach to NAFTA
(Globe & Mail) The two sides hold regular back-channel discussions – from Foreign Affairs Minister Chrystia Freeland and Mexican Economy Secretary Ildefonso Guajardo down to staffers from the respective governments – to compare notes on the U.S. positions and keep one another up to speed on their respective strategies, sources with knowledge of the communications said.
As the fifth round of the renegotiation of the North American free-trade agreement (NAFTA) opens this week in the tony Polanco area of Mexico City, the pact’s junior partners have never been more aligned: They plan to hold firm against U.S. demands on autos, procurement and a sunset clause while seeking quick agreement on less contentious issues.
Badger, bluster, threaten, charm: How Donald Trump will function as negotiator-in-chief
“My impression is that there has been a fair amount of consultation and co-ordinated strategy developing between Canada and Mexico,” said Andres Rozental, a Mexican former deputy foreign minister, who has been following the talks. “And I think that’s positive.”
Scotia Economics view
NAFTA’s 5th round concludes on Tuesday (21 November) and markets have already been told what many thought to be obvious from the beginning: the timelines have been far too ambitious. US Commerce Secretary Wilbur Ross noted that wrapping up negotiations by the end of Q1 “would be an enormously complex thing.” After the completion of the fourth round in Washington that ended in acrimony and finger-pointing, negotiators had already guided that talks would run “through” the first quarter and hence hinted strongly at how key stumbling blocks made an agreement by early 2018 unlikely. That largely confirmed the voices of those experienced on the front-line of trade negotiations who understand how long such complex negotiations can take. What postponing possible completion of the talks into the Spring does is to raise the risk of no deal as political campaigning takes over with Mexico’s Presidential election on July 1st, US primaries on the path to the November mid-terms and elections in Ontario and Quebec next year. Key contentious issues remain focused upon the US desire to have a built-in sunset clause, to specifically provision for much higher US auto import content than at present, to abolish Canada’s dairy marketing boards, and to eliminate independent trade tribunals and as such weaken chapters 19, 20 and 21 of the agreement. To varying degrees, such notions are anathema to Canadian negotiators as both sides appear open to the line that no deal is better than a long-lived bad one at least as a negotiating tactic. Whether this is a negotiating tactic in pursuit of the “art of the deal,” or a serious miscalculation by the US administration, or erratic policy by a US administration that has already abandoned the Trans Pacific Partnership and the Paris Agreement remains to be settled.
Get ready for ‘zombie’ NAFTA and a long fight in Congress
The most likely short-term option is a zombie NAFTA that is neither alive nor dead while North American business waits for a presidential change of heart or a change of president. The zombie option is preferable to a completely dead NAFTA, but the economic effects of such instability are undeniably negative for all three countries.
(Globe & Mail) … there is speculation that this will be the round when increasingly untenable demands from the United States will lead Canada to walk away from the talks.
True, Canada walked away from the free-trade negotiations with the United States in 1987. It did the same in 2016, in the negotiations with the European Union over Canada-European Union Comprehensive Trade Agreement (CETA). But both walkouts were predicated on two assumptions: First, that the negotiations could go no further at the bureaucratic level and would have to be elevated to the political level for resolution, and second, the credible belief that the other side wanted a deal. (for subscribers)
Trade ministers back away from NAFTA negotiating table
Top trade officials from Canada, the U.S. and Mexico won’t meet during 5th round of talks
According to a news release, Canadian Foreign Affairs Minister Chrystia Freeland, U.S. Trade Representative Robert Lighthizer and Mexican Secretary of the Economy Ildefonso Guajardo Villarreal do not see the need to meet, since they held bilateral talks on the sidelines of the APEC summit last week in Vietnam.
A source with direct knowledge of the talks told CBC News that the push for political leaders to take a step back from the negotiating table came from Lighthizer.
It is part of a recent shift in attitude from the U.S., which appears to be taking on a more traditional approach to the renegotiation process, according to the source.
Paul Heinbecker:Trump’s Trade War With Canada
Why is President Trump picking on Canada?
(NYT) Nafta, which predates the smartphone era, needs modernizing. Electronic commerce is not covered by the agreement. Enhanced regulatory cooperation would improve productivity. And modern labor rights and environmental policies would update the agreement and enhance its appeal.
The Trump administration has three choices: walk away from Nafta altogether, which is what many Canadians think is the administration’s lightly disguised objective; insist on its onerous proposals in the hope that Canada or Mexico will accept the unacceptable or themselves abandon the talks; or negotiate in good faith for outcomes that benefit all parties.
Washington’s agreement last month to extend the negotiations until March is a hopeful sign. The Canadian government has made clear that it won’t abandon the talks even if they have to be kicked down the road past the 2018 Mexican presidential election and the midterm congressional elections in the United States. Canada will not provoke the Trump administration, but it also won’t fold under pressure.
If Nafta were to be abrogated, it would be costly for the Americans. Resentment of the United States by its major trading partners would mount, and cooperation across the board would suffer. Tariffs would be reimposed on United States imports and exports. Manufacturing jobs would be jeopardized in many of the states that elected Mr. Trump president. Global supply chains would be disrupted, making American (and Canadian and Mexican) industry less competitive with European and Asian companies.
Stephen Harper’s NAFTA memo shows how little the former PM has changed
Paul Wells pokes holes in Harper’s flawed, albeit very familiar NAFTA memo attacking the Trudeau government for its approach to Donald Trump
(Maclean’s) … all the practical reasons for keeping NAFTA talks a three-member affair, if possible, for as long as possible—trade integration, tariff risks, the lousy bilateral Canada-U.S. alternative, and U.S. coalition-building considerations—mean nothing to Harper, because he’s worried about what the neighbours will think. This is a fair calculation. But it’s not the only conceivable calculation. And throughout Harper’s memo, as reported by Panetta, there’s another familiar feature of Harper’s thinking as a political strategist outside government: an inability to imagine that somebody else might simply have a different playbook. …
It has never been obvious to Stephen Harper that a Canadian prime minister could have a legitimate reason for disagreeing with a Republican U.S. president. Or, for that matter, with Stephen Harper. NAFTA could fall apart any moment. That Canadian actions might cause that sad event would come as a surprise to just about any observer with even a cursory knowledge of the unique personality inhabiting the White House.
Trump’s States Need Nafta
‘Coastal elites’ won’t be hardest hit if the President nixes the trade agreement
(WSJ) … in his zeal to zero out a trade deficit with Mexico, he has turned his sights on an important engine of growth in red-state America.
Almost five million U.S. jobs rely on trade with Mexico, including jobs in auto manufacturing, auto parts, railroads, heavy equipment, machinery, oil and gas, steel fabricating, farming, ranching and food processing, as well as marketing, design, insurance, financial services and intellectual-property.
The pushback against Mr. Trump’s Nafta assault is not coming from “coastal elites” contemptuous of what they refer to as “flyover country.” It’s coming from the “flyover” industrial and farming heartland itself, which has the most to lose.
… Mexico is Missouri’s second-largest export market and Kansas’ largest export market. Almost 100,000 Missouri jobs and 50,000 Kansas jobs depend on trade with Mexico. Exports from the two states to Mexico “have increased by more than 550 percent under NAFTA.”
On Wednesday some 80 food and agricultural business groups sent a detailed letter to Commerce Secretary Wilbur Ross warning the administration of the risks of withdrawal. “Contracts would be cancelled, sales would be lost, able competitors would rush to seize our export markets, and litigation would abound even before withdrawal would take effect,” the letter said. …
Mexico says that in a post-Nafta world it would buy its grain and meat in South America, prompting one wise senator to tell Inside Trade, “We’re not in as strong a position as [Trump] thinks we are.” As to manufacturing, companies are likely, at least initially, to pay any new U.S. tariff and pass the cost on to American consumers, essentially handing them a tax increase. Not exactly what Mr. Trump promised Middle America.
‘Army’ of Lobbyists Hits Capitol Hill to Preserve Nafta
(NYT) Automakers, retailers and other business leaders stormed Capitol Hill on Tuesday in an extraordinary show of force against a Republican president they fear will cripple or kill the North American Free Trade Agreement, an outcome business leaders said could devastate their profits and harm the United States’ ability to compete in a global market.
Lawyers Begin Sketching Legal Strategy to Challenge Possible Nafta Withdrawal
As trade pact talks grow tense, potential for President Trump to pull out prompts close look at ‘uncharted territory’
By William Mauldin
(WSJ) Congressional trade lawyers and attorneys from private firms in Washington have begun meeting informally to come up with ways to challenge any decision by President Donald Trump to pull out of the North American Free Trade Agreement.
Freeland calls U.S. NAFTA demands ‘troubling’ and ‘unconventional’
Canada, U.S. trade public barbs as tense round 4 of NAFTA talks concludes
Foreign Affairs Minister Chrystia Freeland accused the United States of deliberately trying to undermine the North American Free Trade Agreement, calling its list of unconventional proposals “troubling.”
During a news conference at Canada’s embassy in Washington following the joint statements, Freeland said the fact all parties have agreed to take more time between talks and to extend negotiations into next year is a positive sign of good will among all partners.
U.S. tables NAFTA’s ‘poison pill’ with auto sector demands
American negotiators formally present changes to trade deal’s auto sector rules
(CBC) A source with direct knowledge of the talks says the Americans unveiled Friday their protectionist requests that would boost the overall North American content requirements from 62.5 per cent to 85 per cent.
The changes would apply to automobiles, trucks and large automobile parts.
A source told CBC the changes would be phased in gradually.
But the Americans also want a country-specific change that would increase U.S. content requirements to 50 per cent in the first year of the new deal.
No more NAFTA: How Canada could thrive without the trade pact
Obviously, the end of the North American free-trade agreement – the foundation of Canada’s relationship with the U.S. and Mexico – is not this country’s preferred option. There would be economic pain and dislocation, at least initially. Untold numbers of jobs would be lost and investments delayed or cancelled if the world no longer perceived Canada as a gateway to the vast U.S. market. Complex supply chains, particularly in the auto sector, would be disrupted.
But it wouldn’t have to be an economic catastrophe. If Canada plays its cards right, the death of NAFTA could become a catalyst for making the Canadian economy stronger, more outward-looking and less tethered to an increasingly unreliable partner.
The ‘crown jewel’ of NAFTA: Why Canada must fight to retain dispute resolution clause despite tough talks
Several Canadian industries see the mechanism as an indispensable tool in avoiding being slapped with unfair duties from U.S. buyers
Scrapping NAFTA would lead to Canada and the U.S. snapping back to bilateral agreements under the Canada-U.S. Free Trade Agreement or World Trade Organization rules—a reversal that would lead to higher tariffs for many Canadian industries, particularly auto manufacturers.
But the bigger threat in the absence of NAFTA might actually be a lack of access to dispute mechanisms, which has in some ways provided a more powerful tool to Canadian firms than reduced tariffs.
The Chapter 19 dispute mechanism is used to review the fairness of anti-dumping and countervailing duties, a common flash-point between the U.S. and Canada in industries like softwood lumber and aerospace.
Trump muses about pulling out of NAFTA as Trudeau arrives in Washington
(Globe & Mail) Prime Minister Justin Trudeau arrived in Washington on Tuesday as U.S. President Donald Trump created yet another wave of uncertainty about the fate of free-trade, and NAFTA negotiators hunkered down for another tense round of talks.
Trudeau in Washington: What’s on his mind, and what’s on Trump’s? A guide
Why Justin Trudeau is on a Save-the-NAFTA tour
With a January deadline to strike a deal, Mr. Trudeau is visiting Washington and Mexico City this week to meet the leaders of the two other NAFTA countries. His trip comes as the fourth round of talks begins in Arlington, Va., on Wednesday, for which the United States is said to be preparing tough proposals on the automobile and dairy industries.
Wish List for NAFTA Modernization
Canadian American Business Council
As Canada and the U.S. engage in discussions about the future of the North American Free Trade Agreement and management of our common border, the CABC is pleased to offer our top ten suggestions for how to grow the economy and seize the opportunities presented by the Trump and Trudeau administrations and the 115th Congress. These ideas represent diverse sectors from both sides of the 49th parallel, with some of the most iconic brands in the world as well as innovative startups and entrepreneurs,” said Maryscott Greenwood of the Canadian American Business Council.
Wish List for NAFTA Modernization and Renewed Canada/US Border Policy
1. Create a chapter on regulatory cooperation that codifies and strengthens the Canada/US Regulatory Cooperation Council as a permanent entity, and ensures the governments work on tandem on new major rules, with a process to “look back” and align existing regulations.
2. Mutually recognize product standards, testing and certification, and implement zero tariffs on all products.
3. Revamp “Buy America and Buy Canada into one Buy US/Canada” requirement, or consider Canada “domestic” for the purpose of all official procurement at the federal and state levels as it currently is in the defense sector.
4. Support further integration of our North American energy markets, the importance of a robust and interconnected infrastructure system to connect supply and demand, and promote predictable, efficient and expedited regulatory regimes to ensure necessary cross-border infrastructure can be placed in-service in a timely fashion to benefit the North American economy.
5. Enhance protection of intellectual property including, but not limited to, exploring policy options in Canada to counteract judicial interpretations of IP rules, which serve to invalidate long standing pharmaceutical patents. …
How Mexico Deals with Trump
Its citizens loathe him. Its politicians are trying to find common ground.
(The New Yorker) Twenty-three years later [after NAFTA took effect], Mexico’s economy has been transformed, especially in the north, and a new middle class has emerged. But a number of the Zapatistas’ assertions have been borne out. The agricultural sector, centered in the mostly indigenous southern regions, has been devastated. Towns and villages that relied on the sale of produce have seen their markets collapse, and many have fallen into surging criminal economies imposed by drug cartels. At the same time, Mexico has become utterly dependent on the U.S. for economic viability.
[Foreign secretary, Luis Videgaray] “When we get some good news, we should regard it as a small piece of good news, and when we get a tweet or a threat, we should consider it a small tweet or threat. We can’t allow our positions and actions to be overly influenced by what happens day to day. We have to be supremely patient. ” The Mexicans’ greatest obstacle may be Trump’s unorthodox economic ideas. He is obsessed with the trade deficit, which last year, according to U.S. government figures, came to fifty-five billion dollars, out of a total trade relationship worth nearly six hundred billion. … Gary Clyde Hufbauer, of the Peterson Institute for International Economics, told me, “Most of us in trade economics disregard deficit as a metric to measure the worth of a trade agreement. President Trump’s thinking is very simple, and comes from a concept called mercantilism,” a protectionist doctrine that has been assailed by economists since Adam Smith. “He is also a physiocrat, which means that services don’t count. The U.S. has a very large surplus globally in services. But, if you can’t see it and kick it, it doesn’t count for him.”
Trump Twitter bombs and a negotiating standoff: How NAFTA talks could fail
(WaPost) As nearly 700 officials gather next week to discuss overhauling the free-trade agreement between the United States, Mexico and Canada, participants and analysts say the negotiations are at an increasing risk of failure.
President Trump’s Twitter bombs and rhetorical attacks on what he calls the “worst deal ever made” and his administration’s vague and confusing proposals have dismayed Canada, which is now exploring backup options. And they have infuriated Mexico ahead of a presidential election in which voters are demanding that their leaders stand up to the United States.
If officials cannot make more progress in revising the North American Free Trade Agreement next week — the meetings in Washington starting Wednesday are the fourth of seven scheduled rounds of negotiation — the odds of reaching a deal will decrease even more. That would give an opening to Trump to exit the agreement, a move that could disrupt the North American economy.
… there are growing risks that the U.S. negotiating stance could underestimate the limits of Mexican and Canadian leaders and inadvertently wreck the accord. “We’re being faced with a U.S. set of demands that is framed by an ‘America first’ perspective,” Lawrence Herman, a Toronto trade lawyer, said. “That colors the negotiations in a very negative way.”
Freeland avoids awkward handshake after ‘difficult’ NAFTA round
(National Observer) When it came time for the handshakes at the end of five days of intensive negotiations in Ottawa, Foreign Affairs Minister Chrystia Freeland wasn’t taking any chances.
Canada, the United States and Mexico are far apart on a wide range of crucial issues in their ongoing efforts to update the North American Free Trade Agreement.
The three individuals gathered for a joint announcement that they have “effectively concluded” negotiations on one section of the new trade deal, covering small and medium-sized businesses.
Freeland also said she was “confident” negotiators would be able to declare the same level of progress on another chapter on competition, at some point before the fourth round of talks begins in Washington on Oct. 11.
Barrie McKenna (The Globe and Mail) on Bombardier and NAFTA: “Tuesday’s preliminary duties ruling by the U.S. Commerce Department is a vivid reminder that NAFTA’s Chapter 19 is worth fighting for. That’s the section of the North American free-trade agreement that allows Canada, the United States and Mexico to challenge subsidy or dumping decisions before a binding panel if they aren’t convinced another country has fairly applied their own trade laws. And on its current course, a Chapter 19 challenge might be Bombardier’s only hope of coming out on top in the dispute.”
NAFTA talks intensify; U.S. seen putting off key demand on autos
(Reuters) – Talks to update the North American Free Trade Agreement intensified on Saturday although U.S. negotiators looked set to once again withhold proposals for one of the Trump administration’s most challenging issues.
Teams from the United States, Mexico and Canada kicked off the third of seven planned rounds of discussions in Ottawa amid warnings from trade experts that time was quickly running out to seal a deal by the end of the year as planned.
One key issue is the U.S. desire to strengthen rules of origin for autos, which dictate how much of a vehicle’s components must originate from within North America to qualify for tax free status.
The American side did not mention a specific goal in the first two rounds and Canada’s chief NAFTA negotiator on Saturday said he did not think the United States would provide more details during the Ottawa round.
You Won’t Like Mexico When It’s Angry
President Trump’s insults are pushing the Mexican political system into dangerous territory.
By JORGE GUAJARDO
(Politico) In Mexico, however, many believe Americans want to screw us, and Mexican politicians, like politicians everywhere, have to pander to voters if they want to win elections. No matter which of Mexico’s three main political parties they support, the demand is the same: Don’t submit us to humiliation from the United States. Not again. Not ever.
What U.S. observers see as a bargaining tactic for Trump, Mexicans see as a litmus test for our leaders. Any concession to him will be seen as cowering and politically unacceptable for any party, President Enrique Peña Nieto’s included.
This dynamic paints the Mexican NAFTA negotiators into a corner. On the left, presidential candidate Andres Manuel Lopez Obrador says negotiations should wait until after our 2018 elections because the current president is too weak to negotiate successfully. On the right, Senator Roberto Gil Zuarth of PAN, the rough equivalent of a Christian democratic party, calls for Mexico to leave the negotiating table unless we are shown respect by Trump, and PAN presidential contender Margarita Zavala demands our national dignity not be compromised. In the middle, the president’s Institutional Revolutionary Party (PRI) sits warily, hoping they can continue the negotiations without Trump blowing everything up. They know that if he continues to threaten and insult Mexico, they’d have no choice but to leave the negotiations and break the agreement. We would rather wrap ourselves in the flag and jump to our deaths than be humiliated.
(Globe & Mail) It’s the final day of the second round of renegotiations of the North American free trade agreement, and the Americans — who kicked off these trade talks — are taking the negotiating stance that they don’t need to concede a thing. Canada, meanwhile, is pushing for the U.S. and Mexican governments to strengthen labour standards in their countries. With a hardline administration in Washington and a progressive government in Ottawa, negotiators may be playing for their audiences at home.
And after months of barbs about how the Liberal government could be jeopardizing the NAFTA negotiations, the Conservative Party is taking a step back. Erin O’Toole, a former Conservative leadership candidate and the party’s new foreign affairs critic, says his party will not be in “attack mode” when dealing with the government’s approach to the NAFTA renegotiations. Mr. O’Toole says his party is willing to offer the Liberals nonpartisan support.
NAFTA lessons: What I’ve learned negotiating with the US
As a Canadian ambassador once said, negotiating with the US means coping with ‘a country of a thousand players who can deliver a thousand wounds.’ As NAFTA talks continue, veteran diplomat Jeremy Kinsman reflects on his own experience and cautions against appearing too eager for an accord.
(Open Canada) We’ll inevitably have to disagree with the US on some international and even bilateral issues: how we communicate that is important, including what we say for political purposes back here. We sure shouldn’t go down there to woo partisan allies against the president, as Stephen Harper did in telling a New York audience that Obama’s choice on Keystone XL was a “no-brainer,” or in thinking it was smart for Canadian Conservative cabinet ministers to traipse to Washington for GOP prayer breakfasts.
That being said, we need to connect to Americans who are able to see the benefits in a win/win NAFTA deal, from tens of millions of workers, to state governors and legislators, to media and to civil society, to all who have positive feelings for Canada at a time of unprecedented favourable profile in the US for our attractive young prime minister. We shouldn’t vaunt those connections but at the end of the day, they are very pertinent assets in a negotiator’s toolkit.
Of course, in hoping for even-handedness, objectivity about the facts, and a balanced outcome, we know it has to be one that enables the president to declare victory. But we need him also to celebrate it as a win for North America as a whole, one that we and the Mexicans will endorse for our own economies. It would be even better if we could describe our accord as something exemplary for others in the world. North Americans should re-ignite faith in such transnational agreements at a competitive and even dangerous time when protectionism and populism have made a cyclical resurgence.
‘May have to terminate?’ Trump says Canada being ‘very difficult’ on NAFTA
(CTV) U.S. President Donald Trump is again suggesting that NAFTA be terminated, this time saying that both Canada and Mexico are being “very difficult”.
While he’s threatened to end the trade agreement before, this is the first time Trump has complained about Canada’s role in the talks.
Experts of trade law say cancelling NAFTA would be complicated: it would prompt a legal showdown between the White House and Congress.
The latter once passed a law implementing NAFTA and could argue it is still on the books, meaning the agreement remains in effect.
Justin Trudeau, unlike Trump, is taking NAFTA renegotiation really seriously
The self-proclaimed master dealmaker is likely to get taken to the cleaners.
(Vox) A fundamental question about this process is whether NAFTA revision — which featured so heavily in Trump’s campaign rhetoric — is even something the White House cares about anymore.
With Steve Bannon gone, the administration’s leading advocate of protectionism isn’t around anymore. Trump’s top economic policy officials, Gary Cohn and Steve Mnuchin, don’t appear to particularly share the president’s views on trade policy, and Republican Party congressional leaders certainly don’t. Trump himself, unlike his foreign counterparts, did not make the renegotiation launch a major messaging point or send a top-ranked official to represent the United States at the talks.
All three countries have agreed to conduct the NAFTA renegotiation talks on an expedited basis, suggesting a likely emphasis on picking some low-hanging fruit and declaring victory.
Canada should prepare for life without NAFTA
By Lawrence L. Herman,former Canadian diplomat and is a senior fellow of the C.D. Howe Institute
(Globe & Mail) [U.S. Trade Representative Robert] Lighthizer’s opening statement last week in Washington was disappointingly negative, including incomplete factual statements, a bullying declaration that NAFTA has “fundamentally failed many, many Americans.” Calling for “balance and reciprocity,” higher U.S. automotive content and even provisions on currency manipulation, he made it clear that there was little common ground with Canada and Mexico.
Things may change and prospects may improve, as the professional negotiating teams get down to hard work in 26 or 27 separate groups and hard bargaining takes place. Some of the rhetoric will dissipate as drafts are reviewed and proposals are discussed in quieter chambers in Washington, Ottawa and Mexico City over the next few months.
There are indeed areas where all three countries share a fair degree of consensus, notably in the NAFTA 2.0 modernization agenda, bringing the agreement into the 21st century, the things Foreign Minister Chrystia Freeland and her Mexican colleague have spelled out.
However, considering the divergence with the Americans on the fundamentals and the absence of shared vision, combined with very real time constraints and a toxic and volatile political climate in Washington, the prospects for a successful outcome are not particularly favourable.
Hopefully, we won’t reach the cliff edge. But given the possibility of such an outcome, no matter how regrettable, Canada should be considering a world without the NAFTA or, possibly, without even the Canada-U.S. free-trade agreement. Contingency planning is what trade-policy formulation is all about.
U.S. demands end to NAFTA trade-dispute panels
(Globe & Mail) The United States has formally demanded the Chapter 19 dispute resolution panels favoured by Canada be scrapped from the North American free-trade agreement and broached the thorny subject of government procurement and contracting in the first round of trade talks, The Globe and Mail has learned.
Trade negotiators wasted no time diving into some of the most contentious pieces of NAFTA in the opening round of talks in Washington, which wrapped up Sunday after five days.
The United States did not, however, present further details on the U.S. content requirement in cars and trucks that Washington has signalled it will push for, sources with knowledge of the discussions said.
Opinion: Is Chapter 19 worth fighting for in NAFTA negotiations?
“The scope and volume of proposals during the first round of the negotiation reflects a commitment from all three countries to an ambitious outcome and reaffirms the importance of updating the rules governing the world’s largest free trade area,” read a trilateral statement from the Canadian, U.S. and Mexican governments Sunday.
The United States made official its demand that the binational panels used to settle trade disputes under Chapter 19 be done away with. One source with knowledge of the talks said American and Canadian negotiators each have presented vastly different texts for a revamped Chapter 19. Ottawa has vowed to walk away from the talks before it accepts a NAFTA without the panels.
(Quartz) How to succeed at Nafta without even changing it. US border cities are indeed growing slower than their Mexican and Canadian counterparts. But contrary to US president Donald Trump’s rhetoric, the fault lies not with Nafta. Ana Campoy and Youyou Zhou dive into the economic data and find the problem is that US border towns are too often treated as solitary outposts, rather than part of the international hubs of economic activity to which they contribute.
Here’s a way the US could get a better deal out of Nafta without changing it
NAFTA Negotiations: Your guide to the players and priorities that matter
The first round of renegotiations of the North American Free Trade Agreement kick off this week in Washington. Here’s what — and who — you need to know.
(Open Canada) As talks begin Wednesday — the second round is expected to be held in Mexico in early September, with the third in Canada at a date yet to be determined — we bring you up to speed on the priorities identified so far by Canada, the United States and Mexico, along with the players who will be at the table this week in Washington and those who hold influence behind the scenes.
- Team Canada: Well-prepared, with firm priorities
- Team United States: Focused on reducing trade deficit
- Team Mexico: Trepidation turns to cautious optimism
Foreign Affairs Minister Chrystia Freeland attended a meeting Monday morning at the Standing Committee on International Trade to discuss the government’s plan in the NAFTA renegotiations set to begin on August 16th in Washington. The Minister did not reveal much in terms of specifics and mainly highlighted the preparation and consultation efforts carried out until now. The US and Mexican governments have formally, and voluntarily, released their negotiating goals (see here and here (Spanish only), respectively). Link to the full text of the speech
John Geddes: NAFTA emerges as Trudeau’s biggest, unexpected test
The Liberals have been hit with a challenge that never fit into their plan. As talks begin this week, the stakes are enormous.
The start of North American Free Trade Agreement (NAFTA) talks this week—negotiations foisted on Canada and Mexico by U.S. President Donald Trump—provides a moment to marvel at how trade has emerged, unexpectedly, as a defining issue for Prime Minister Justin Trudeau’s still-young Liberal government.
The public opinion consensus in Canada has turned free trade into a can’t-lose cause to champion in Ottawa. Last fall, the tenacity then-trade minister Chrystia Freeland displayed in sealing the deal on the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) cemented her status as one of the few undisputed rising stars in Trudeau’s cabinet. The PM promoted her to Foreign Minister early this year, conspicuously leaving her in charge of Canada-U.S. trade—a daunting defensive challenge after NAFTA-bashing, TPP-nixing Trump won the presidency.
Presiding over the file offers Freeland a plum chance to strategically bind together two politically promising themes. Safeguarding Canada’s NAFTA-assured access to U.S. markets is—as that Pew poll confirms—a pragmatic priority most Canadians back. Countering Trump’s retrograde “America First” rhetoric about NAFTA appeals to loftier principles, the kind Freeland venerated in her major speech to the House on June 6 about Canada’s steadfast commitment, in the Trump era, to the postwar international order. “The system,” Freeland said, “had at its heart the core notions of territorial integrity, human rights, democracy, respect for the rule of law, and an aspiration to free and friendly trade.”
Fitting NAFTA into that aspirational, elevated, internationalist, decidedly un-Trumpian frame conforms better with the self-image of Liberals, and many other Canadians, than the more familiar positioning of free trade as a priority of corporate lobbyists. Still, there’s that, too. The business-oriented C. D. Howe Institute flags three specific, stated Trump goals (plus his sweeping aim of somehow adapting NAFTA to shrink the U.S. trade deficit) that the Canadian negotiating team must “strongly resist”:
What the U.S. wants from NAFTA talks
The United States has released its objectives for the upcoming NAFTA talks. Here are some highlights
(Globe & Mail) United States Trade Representative Robert Lighthizer on Monday released a broad summary of objectives that will underpin the Trump administration’s trade talks with Mexico and Canada for the renegotiation of the North American free-trade agreement (NAFTA).
Although the document is vague, it does single out areas where the U.S. may seek concessions from Canada. Here are some highlights:
- The U.S. says it aims to improve the U.S. trade balance and reduce the trade deficit with NAFTA countries, either by increasing American exports or by reducing Canadian and Mexican ones.
- Canada’s supply management system for dairy and poultry could face closer scrutiny.
- The U.S. wants to see Ottawa increase the amount Canadians can buy from the U.S. without paying duties to $800.
- Another goal is to bring labour and environment provisions into the core of the agreement rather than a side agreement.
Econo-metrics: If the U.S. list of objectives for NAFTA talks represents what Trump wants to achieve, Canada’s negotiators have a fight on their hands
On Monday Donald Trump’s administration released its objectives for the coming renegotiation of the North American Free Trade Agreement, as required by U.S. law. Congress has 30 days to consider the agenda. Talks between the U.S., Canada and Mexico can now begin by the middle of August.
It is too early to separate tactics from aspirations. Still, the 17-page outline represents a new life for grievances that U.S. business interests have harboured against Canada and Mexico for decades. Earlier this year, Trump suggested that Canada-U.S. trade needed little more than a tweak. His starting point for the NAFTA negotiations suggest that he’s become more ambitious.
U.S. Calls for ‘Much Better Deal’ in Nafta Overhaul Plan
(NYT) Claiming it wants to negotiate a “much better deal for all Americans,” the Trump administration on Monday revealed its most detailed list of objectives to date for an overhaul of the North American Free Trade Agreement with Mexico and Canada.
The United States Trade Representative said a revamped Nafta must include provisions to eliminate unfair subsidies and give the United States broader authority to crack down on an influx of cheap products.
Trade is a centerpiece of President Trump’s economic agenda, and the renegotiation of Nafta has been a pillar of his promise to revive American manufacturing. “Too many Americans have been hurt by closed factories, exported jobs and broken political promises,” said Robert Lighthizer, Mr. Trump’s trade representative.
The 17-page document the administration sent to Congress echoes Mr. Trump’s tough talk on trade by making the reduction of America’s trade deficit with its neighbors its top priority. However, it also builds off the Trans-Pacific Partnership trade deal that Mr. Trump abandoned when he took office, borrowing concepts about labor regulations and the environment.