NAFTA trade
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WASHINGTON, D.C., U.S. — The clock has been set to ticking once again in the ongoing saga that has been the renegotiation of the 24-year-old North American Free Trade Agreement. The United States and Mexico have held separate ministerial-level talks in Washington during the past couple of weeks, while Canada remained on the sidelines. The goal of the U.S.-Mexico talks was to resolve before the end of August the major disagreements that thus far have prevented a successful conclusion to the NAFTA negotiations.

The August deadline reflected two realities. First, the Mexican government sought to ensure the country’s current president, Enrique Peña Nieto, signs the new agreement before he leaves office on Dec. 1. This was not to say that there are significant differences between Peña Nieto and his successor President-elect Andrés Manuel López Obrador, who was elected July 1, on what a new NAFTA should look like. None have been publicly stated, and López Obrador’s designated lead negotiator, Jesus Seade, accompanied Economy Minister Ildefonso Guajardo, Mexico’s current lead negotiator, to both ministerial meetings.

Peña Nieto told the Mexican press after the first U.S.-Mexico ministerial meeting, “We are determined to speed up negotiations in order to make progress in a significant way throughout the month of August. It’s not a deadline, but we are convinced that we can reach an agreement.”

On including Seade in the Mexican negotiating team, Peña Nieto said, “Presenting a single negotiating front with the United States and Canada, I believe, creates conditions of greater tranquility but above all confidence in the agreements that we will eventually have.”

But if Peña Nieto is to sign the agreement before Dec. 1, an accord in principle must be reached by late August because the United States by law first must allow for a 90-day comment period on any agreement, Robert Lighthizer, the U.S. trade representative, explained to members of the Senate Appropriations Committee’s Subcommittee on Commerce, Justice, Science, and Related Agencies during a hearing on July 26.

USTR Robert Lighthizer
Robert Lighthizer, the U.S. trade representative

During the same hearing, Lighthizer said, “My hope is that we will before very long have a conclusion with respect to Mexico, and that as a result of that, Canada will come in, and we can compromise.” He added that Canada to date hasn’t shown the same willingness to compromise as has the United States or Mexico.

An open question was whether Canada would, in fact, “come in” and accept results of the U.S.-Mexico talks as the foundation of a new NAFTA. Canadian Foreign Minister Chrystia Freeland traveled to Singapore to attend a meeting of Association of Southeast Asian Nations foreign ministers last week, so wasn’t available to attend the U.S.-Mexico ministerial meeting on Aug. 2 even if she had been invited.

But during a trip to Mexico on July 25, Freeland affirmed, “Canada very much believes in NAFTA as a trilateral agreement. While the ultimate deal will be trilateral … it’s completely normal to have a bilateral meeting.”

During Freeland’s visit, both Peña Nieto and López Obrador said they also were committed to NAFTA as a trilateral agreement.

The United States’ commitment to the trilateral character of NAFTA was less clear given President Donald Trump’s long-standing dim view of the pact and his suggestion he might seek a separate agreement with Mexico.

NAFTA negotiations last broke off when the United States imposed tariffs on Canadian and Mexican steel and aluminum on June 1, which prompted both nations to raise tariffs on certain U.S. products in retaliation. Lighthizer indicated that he expected the United States as well as Mexico and Canada to lift those tariffs as part of a successful NAFTA renegotiation.

The major areas of disagreement between the United States and Mexico and Canada remained U.S. demands related to rules of origin specifying the minimum percentage of an automobile or truck’s content that must originate in North America, and in the United States in particular, cashiering the current dispute resolution procedures and instituting a five-year sunset clause that would end the agreement if the parties do not agree to renew it every five years, which raised the prospect of regularly renegotiating terms of the agreement.

Both Mexico and Canada have expressed particularly strong objection to the sunset clause proposal because it would make it difficult for businesses in the three countries to make investments or engage in long-range planning for cross-border trade and development.

During the July 26 Senate subcommittee hearing, Senator Lamar Alexander of Tennessee, reminded Lighthizer that many Republicans in the Senate opposed a sunset clause for the same reasons.