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NAFTA talks reach make-or-break point

NAFTA talks reach make-or-break point

Chrystia Freeland arrives in Washington Monday for more high-level talks

Katie Simpson · CBC News · May 06, 2018

NAFTA negotiators are nearing the end of the runway.

Observers tracking the ups and downs of these intense trade talks say that if Canada, the United States and Mexico can’t get something on paper over the next few weeks, negotiations could easily drag on into 2019.

Foreign Affairs Minister Chrystia Freeland arrives in Washington Monday for another round of meetings with her political counterparts — and she hasn’t booked a return ticket to Ottawa yet.

“We are really committed to doing whatever it takes to get a good win-win result,” she told reporters on Saturday, but was quick to add she would not “pre-judge the outcome of the talks.”

Freeland’s schedule has been nearly upended by the demands of NAFTA; she’s been in D.C. almost every week since March. She even cancelled longstanding plans to travel to Brussels for NATO meetings last week, opting to stay at the negotiating table instead.

“We are coming up against some very significant deadlines,” said Flavio Volpe, president of the Automotive Parts Manufacturers’ Association.

Three deadlines worry the negotiators and their political masters.

The first is June 1. The Trump administration is threatening to hit Canada and Mexico with heavy tariffs on steel and aluminum unless it gets a renegotiated NAFTA agreement that it likes by that date.

The U.S. previously threatened to impose those tariffs by May 1, but at the last minute President Donald Trump granted both countries an extended exemption.

This is … much more complicated than I think anybody realized when they started.
– Lawrence Herman, trade lawyer

The second deadline is July 1, the day Mexican voters head to the polls for a federal election. As the campaign intensifies, so does the threat that it will force delays in the NAFTA process.

The fall midterm elections in the United States represent the third time factor that could delay talks and push negotiations into 2019.

It’s not ideal for the Canadian economy if talks drag on for months longer, since uncertainty erodes investor confidence.

“Oh well, goodness, I think the biggest problem is with private investment,” said Pedro Antunes, deputy chief economist for the Conference Board of Canada.

“The uncertainty for businesses about whether they will have access to the North American market has played out a big role in holding back private investment intentions.”

Antunes said that if all three countries are able sign off soon on a preliminary NAFTA agreement-in-principle, it would send some positive signals to those jittery investors.

“An agreement-in-principle is simply an agreement to agree later on,” he said. “It doesn’t provide a whole lot of certainty. But I think what it will provide is some certainty that things won’t change for the next little while, and I hope that would be positive for investors.”

Sources have told CBC News that all three NAFTA countries are seeking an agreement-in-principle in the short term that would focus primarily on the auto sector.

For industry leaders like Volpe, that’s welcome news.

“We could see a broad sense of principles that could then be handed to staff and industry to hammer out exactly what that looks like down at the customs level,” Volpe said.

“I think there’s real will around the table … to get an agreement-in-principle.”

Any sort of preliminary deal would offer only a temporary respite for negotiators, according to a Canadian trade lawyer.

“There’s a long way between an agreement in principle and a final treaty that can be signed and presented to the legislatures of all three countries for ratification,” Lawrence Herman told CBC News.

“This is very complicated, much more complicated than I think anybody realized when they started.

“They’ve made a lot of progress, but once the outlines of an agreement are there, the technical elements have to be negotiated.”

Herman said it’s important to remember that when and the European Union reached an agreement-in-principle on CETA (the Comprehensive Economic Trade Agreement) in 2014, it took several years more before the deal was finalized and presented for ratification.

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