WASHINGTON, D.C., U.S. — Talks between Canada and the United States aimed at overcoming remaining obstacles to concluding a new tripartite trade agreement to revise or replace the North American Free Trade Agreement resumed Sept. 5 after negotiators failed to reach agreement the previous week.
U.S. and Mexican negotiators on Aug. 27 reached what the Office of the U.S. Trade Representative termed “a preliminary agreement in principle” on a new bilateral accord to supplant NAFTA.
The U.S.-Mexico trade agreement resulted in a scramble as Canadian negotiators, who were excluded from the NAFTA renegotiation for the previous several weeks, flew to Washington for talks with U.S. and Mexican negotiators to see if there was enough common ground to commit their government to the agreement, or the “preliminary agreement in principle,” before Aug. 31.
This they were not able to accomplish in so narrow a timeframe, so President Donald Trump on Aug. 31 notified Congress of his intent to sign the U.S.-Mexico trade agreement that would include Canada “if it was willing.”
Trump threatened that if Canada did not join the agreement, he would impose tariffs on Canadian-made cars.
“I think with Canada, frankly, the easiest we can do is to tariff their cars coming in,” he said. “It’s a tremendous amount of money, and it’s a very simple negotiation. It could end in one day, and we take in a lot of money the following day.”
With so many self-imposed deadlines for concluding an agreement having come and gone, why now the rush? The chief difference was said to be political exigencies attending to the inauguration of a new administration in Mexico. On Dec. 1, Andrés Manuel López Obrador will become president of Mexico, succeeding the current president, Enrique Peña Nieto. Both Peña Nieto and López Obrador placed a high priority on Peña Nieto signing the new trade agreement before he leaves office. A new administration may be pressured to find new priorities, which could extend the renegotiation, which neither the United States nor Mexico wanted.
To accommodate that political goal, the Trump administration faced its own timetable as required by its “fast-track” negotiating authority granted by Congress. Under Trade Promotion Authority (fast track), the administration must notify Congress it has negotiated a new agreement 90 days before Congress is required to vote the agreement up or down. Thirty days after the notification and 60 days before Congress must vote, the administration is required to send the text of the agreement to Congress.
The best outcome of the current talks between the United States and Canada would be a meeting of minds that would clear the way for Canada joining the agreement and negotiators successfully drafting and publishing the entire official text of the agreement with all its details so it may be presented to Congress for its consideration by the end of September, Oct. 1 at the latest.
Many members of Congress pointed out the negotiating authority it granted the administration was for reaching a new trilateral agreement between the United States, Mexico and Canada, suggesting there may be opposition or even questions of legality should Canada be left out of the agreement. Virtually all U.S. business, agricultural and even labor constituencies also emphasized the importance of Canada remaining a party to any North American trade accord.
But just ahead of this week’s talks, Trump tweeted, “There is no political necessity to keep Canada in the new NAFTA deal. If we don’t make a fair deal for the United States after decades of abuse, Canada will be out. Congress should not interfere w/these negotiations or I will simply terminate NAFTA entirely & we will be better off.”
Canadian Prime Minister Justin Trudeau on Sept. 4, before dispatching negotiators to Washington, said, “Canada will not sign a deal unless it is in the interest of Canadian workers, the Canadian middle class and Canadians in general.”
U.S. and Canadian negotiators will have to discuss and resolve several differences with three said to be the most contentious.
First, Canada wants to retain its right to limit dairy imports while the United States seeks unfettered access to the Canadian market. (It should be noted Canada made concessions related to access to its market for dairy products while negotiating the Trans-Pacific Partnership, the trade accord from which Trump withdrew the United States during his first week in office.) Second, Canada wants to retain in a renegotiated NAFTA the current or similar procedure for arbitrating complaints about trade barriers, including anti-dumping tariffs and countervailing duties, before an independent panel as contained in Chapter 19 of NAFTA. The U.S.-Mexico trade agreement would eliminate Chapter 19. And third, it was uncertain that the compromise reached by Mexican and U.S. negotiators over the lifespan and review of a renegotiated NAFTA will be acceptable to Canada.