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January 29, 2018
MONTREAL — It ain’t over. The North American Free Trade Agreement slogs ahead with minor progress and no withdrawal notice — yet — from United States President Donald Trump.
“I am, without being overly optimistic, I am heartened by the progress, as stated today, which we have made here in Montreal,” said Canadian foreign minister Chrystia Freeland during a press conference Monday.
Despite harsh, but not unexpected, words from U.S. Trade Representative Robert Lighthizer, the sixth round of renegotiating the trilateral trade deal 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.
This proposal, I think if the United States had made it, would be dubbed a poison pill.
-U.S. Trade Representative Robert Lighthizer
Based on the public statement their boss offered, the U.S. will put up a fight on Canada’s idea to include emerging technologies and intellectual property as auto parts in a rules-of-origin assessment.
But Flavio Volpe, representing the auto parts industry on the margins of the talks in Montreal, exuded optimism on this front, theorizing that Lighthizer is just trying to be a tough negotiator. He suggested the U.S. auto industry will be on board and will lobby for the idea’s approval — it was, after all, consulted on the construction of the proposal.
“I think the signal here is probably the Canadian proposal is so good for industry, and you’ll hear from all the industry commentators, that it might be difficult to say that that idea came from somebody else.”
Lighthizer’s harshest remarks were about a Canadian proposal to match any restrictions the U.S. places on the services market, according to Freeland’s interpretation. He had said, “This proposal, I think if the United States had made it, would be dubbed a poison pill.” Freeland explained in a subsequent press conference that Canada’s original position was to open up the services trade but that it was the Americans who wanted to impose new limits.
Upon his arrival in Montreal, Lighthizer joked that he loves Quebec’s motto, “Je me souviens,” and maybe it should hang in his office.
He and his two counterparts seem to have good memories indeed. The three have repeated each other at each round with similar rhetoric. Freeland and Lighthizer have again sparred with the same she-said, he-said arguments over who has a trade deficit with whom and whether the balance of trade is even a valid way to judge the effectiveness of an agreement.
The two sparred — again — on softwood lumber and Canadian litigators seeking a settlement after new tariffs and countervailing duties were imposed by the U.S.
Freeland repeated Monday a phrase she has previously used to indicate the minor progress that each round has produced on “bread-and-butter” aspects of the deal.
It’s true that some such progress appears to have been made. A third chapter, on anti-corruption, has been concluded. Several more, on telecommunications, digital trade, sanitary and phytosanitary measures and customs and trade facilitation, are nearing conclusion.
But a slow-and-steady approach that has led to just three chapter conclusions in six negotiating rounds might no longer cut it.
“We finally began to discuss some of the core issues, so this round was a step forward, but we are progressing very slowly,” Lighthizer said. “We owe it to our citizens, who are operating in a state of uncertainty, to move much faster.”
Mexico’s next general election is scheduled for this summer and a new president won’t come into office until the beginning of December. Mid-term elections in the U.S. this fall, in the meantime, will see a lame-duck Congress operating until January.
If negotiations extend that far into the future, domestic political situations would likely shift the NAFTA negotiating calculus. A new deal won’t come into effect without ratification by each nation’s legislature and a different composition in the U.S. Congress could mean that different ideas are prioritized at the negotiating table.
Freeland agreed with Lighthizer that all three countries are looking for a deal “as soon as possible.”
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