Op-Ed: Top officials pushing for a NAFTA agreement soon

Posted Apr 26, 2018 by Ken Hanly
Regular negotiations for NAFTA stopped some time ago to be replaced by negotiations between ministers from the US, Mexico and Canada. A handful of high placed politicians are working out a deal behind closed doors.
Canadian Foreign Minister Chrystia Freeland says NAFTA talks are making progress
Canadian Foreign Minister Chrystia Freeland says NAFTA talks are making progress
The process is quite opaque and only a few people are involved. There has been no public input into the process and few if any details are available as to what is happening.
President Trump speaks of the talks as going nicely. In the past Trump has complained about how bad the deal was but as often happens has changed his tune. He has also in the past talked of walking away from the deal if it is not improved to his liking.
Frantic negotiations taking place in Washington
Significantly there is no hint now of spreading the negotiations among the three countries. The recent talks have all been in the United States capital Washington D.C.
Mexican Economy Minister Ildefenso Guajardo and Chrystia Freeland the Canadian Foreign Affairs Minister both attended meetings April 24th at the US Trade Representative's office in Washington. These high level meetings are expected to continue Wednesday and probably Thursday as well according to an anonymous official familiar with the talks. The negotiations come prior to a US trade mission to China, and as Mexican and US elections come closer.
Goal of faster negotiations not entirely clear
The US has spoken about getting a deal "in principle" and then having the technical details worked out later However, Mexico claims it wants a comprehensive agreement. Trump said as well at his meeting with French President Macron: “I could make a deal very quickly, but I’m not sure that’s in the best interest of the United States. We’ll see what happens, but we’re doing very well.” No doubt he hopes to milk more concessions from Mexico and Canada in exchange for not imposing duties on steel and aluminum.
Deal could come soon.
Moises Kalach, the trade head for the Mexican business chamber CCE said in an interview there was a 70 percent chance of a deal being made soon, within the next ten days under optimistic conditions. If there is no deal in coming days, Kalach said it made sense to put negotiations on hold until after the Mexican election in July and the US elections in November. However, this would complicate matters because the likely winner of the Mexican election is a leftist who is opposed to NATO as it is now. He will likely be a tougher negotiator.
However, Kalach points out that negotiating teams have agreed on nine or ten more topic areas that are ready for ministers' review and approval. Work is reportedly finished on telecommunications issues. Of course there is no hint of what the new regulations are. Yet wide differences remain including the rules of origin for vehicles and their components.
The rules governing vehicle origins and parts
Early on, the US promoted increased US content for cars and parts, policies designed at boosting US manufacturing but would cause problems for existing supply chains. Neither Canada nor Mexico would accept the US proposals and they have been since modified.
Friedlander claims that negotiators have been having constructive talks on the subject, and that the talks were moving ahead due to some creative thinking put forward last month by the US.
Friedlander said that although there were other issues to be resolved "we think a win-win-win agreement is possible". As far as Americans, Canadians, and Mexicans are concerned it will be a lose-lose-lose agreement but it will be a win situation for global corporations as their power over governments increase as the deal will create a more favorable framework of operation for those corporations within the three countries.
US is pushing for agreement by early in May
The Trump administration is pushing for a deal by early May. Guajardo said that he thought that there was an 80 percent possibiliity that there would be an agreement by the first week of May before the Mexican elections on July 1. Polls show leftist candidate Andre Obrador is likely to win posing a new set of problems for negotiations.
The present negotiations have covered the most ground since the last official round of negotiations that was back in early March. As well as the automotive issue, agriculture, and dispute settlement mechanisms have also been discussed according to a preliminary agenda seen by Bloomberg.
Guajardo called what is happening as a permanent round of negotiations. Freeland said that the negotiators were working hard late into the night on some of the issues and would be back at it the next day. There should be updates about the negotiations soon but dont expect to learn much if anything about the details of what is happening.
Key issues need to be settled
Some key issues are not even being discussed such as the proportionality issue, as discussed in a Digital Journal article about NAFTA and Canada's priorities: "The proportionality clause is unique to NAFTA: "Proportionality is "unique in all of the world's treaties," writes Richard Heinberg, a noted California energy expert. Cyndee Todgham Cherniak, a Toronto trade lawyer, says the energy chapter is unique for a trade agreement. There are only three free trade agreements in the world that have energy chapters, and the other two don't have NAFTA-like proportionality clauses." Proportionality requires NAFTA members to make available the current share of energy exports to other NAFTA members even when their are energy shortages in that country."
The Canadian priorities often consist of vague generalities whereas the US list was 14 pages and full of specifics. The Council of Canadians has a list of what it thinks should be Canadian concerns. While a few are on the actual list of Canadian priorities many are not:
"Remove Chapter 11.
Put workers and their rights at the heart of a new agreement.
Promote and protect public services.
Include strong provisions to protect the environment and natural resources.
Maintain the right to regulate in the public interest.
Remove the energy chapter and cancel the proportional energy sharing provision.
Remove all references to water.
Maintain and expand the exemption for culture.
Protect Canada’s supply management system.
Protect and enhance Indigenous rights."
This is a dream list while we await what may be a nightmare result. A favorable results would be for Trump, Canada, or Mexico to simply walk away.