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Missing another NAFTA deadline would be risky — but not fatal

Missing another NAFTA deadline would be risky — but not fatal
‘Whether Canada is in or out … you can’t get the text done by Sept. 30,’ ex-U.S. negotiator says

Janyce McGregor, CBC News
Sep 23, 2018

Washington’s warning to Canada to not miss the next deadline in the renegotiation of the North American Free Trade Agreement is starting to sound at this point like a boy crying wolf.

Several deadlines have been blown already. The talks continue.

The latest warning came Friday from White House economic adviser Kevin Hassett, who told Fox News that President Donald Trump’s administration was “a little puzzled” about why negotiators hadn’t yet closed the “very good deal that was designed by Mexico and the U.S. to appeal to Canada.”

“We’re getting very, very close to the deadline where we’re going to have to move ahead with Mexico all by themselves,” he said.

That deadline — Oct. 1 — is next weekend. Last week’s talks failed to make a breakthrough, and it’s not clear when officials might meet again. Might another deadline come and go without a deal? Should Canadians be alarmed if it does?

It certainly wouldn’t be the first time. In May, negotiators put on the steam to reach an agreement in time for the current U.S. Congress to vote on it.

It didn’t work. The U.S. turned up the heat and stopped exempting Canada and Mexico from the global steel and aluminum tariffs it levied to protect the “national security” interests of its domestic industry.

Then came some secret summer brinksmanship: the U.S. and Mexico met alone for nearly the entire month of August, reached a preliminary agreement, and then expected Canada to sign on within a couple of days.

No dice. Congress was notified a deal had been reached that Canada could join as talks bled into September.

Already too late?
The U.S. Congress needs to see text 60 days before Trump would be authorized to sign anything with outgoing Mexican President Enrique Peña ​Nieto, who leaves office on Dec. 1.

People familiar with drafting trade agreements say they suspect that because nothing was decided this week, it’s already too late — the key players just aren’t admitting it publicly.

“Whether Canada is in or out, either way, you can’t get the text done by Sept. 30,” said Jennifer Hillman, a former U.S. trade official and adjudicator, now a professor at the Georgetown Law Center.

The August agreement was premised on Canada joining, and it would need a drastic overhaul before the United States and Mexico could proceed as a twosome. “I just don’t see how that’s realistic,” she said.

Plus, Congress is expecting a renegotiated NAFTA, not a two-way deal, Hillman said.

Foreign Affairs Minister Chrystia Freeland told reporters this week that her office has received notes of encouragement and gifts of flowers and chocolate from Canadians grateful to negotiators for standing up for them at the NAFTA table. (Carolyn Kaster/Associated Press)

Yes, some Republicans loyal to Trump are warning Canada to get with the program, but “what you’ve mostly heard from the Congress is, ‘Don’t you dare do a deal without Canada,'” she said.

At the same time, it’s still all just talk.

“So far, this Congress has been completely spineless,” said Hillman.

Couple that with an impatient, unpredictable president, and there’s rough road ahead if a last-minute deal doesn’t land soon.

Risky bet
Yes, Congress could intervene to stop the president from withdrawing from NAFTA. Others might go to court to hold him back as well.

And yes, the automotive industry’s dire warnings about car tariffs could be taken seriously, to the point where the Commerce Department decides not to proceed with them (or to at least exempt Canada and Mexico).

But if you’re in Justin Trudeau’s government, you’re thinking it’s pretty stomach-churning to count on American politicians and business interests right now — with the fall midterms bearing down and with the urge to stage some attention-grabbing drama running high in American political circles.

So what happens if another deadline is blown?

“My assumption is that the negotiations can keep going,” Hillman said. “To ask Canada to sign on in just three weeks strikes me as a little bit unfair.”

The process that was started at the end of August has a 90-day minimum time frame, but “there is no maximum,” she pointed out.

It helps Canada’s case that it appears to be working hard toward a deal, she said.

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