Published: Fri, May 18, 2018

A New NAFTA Deal Doesn't Seem Close, Despite Deadline

A New NAFTA Deal Doesn't Seem Close, Despite Deadline

Prime Minister Justin Trudeau said Thursday that the three nations were getting closer to inking an agreement and they had a decent deal on the table on autos during an event at the Economic Club in NY. Canadian Foreign Affairs Minister Chrystia Freeland's spokesman called the deadline a USA issue.

David MacNaughton, Canada's ambassador to the USA, said earlier on Thursday that Canadian and American officials would gather in Washington to discuss NAFTA. He cited big differences on intellectual property, agriculture, online purchases, energy, labour, rules of origin, and other issues.

Among them: government procurement, US access to Canada's dairy market, the system for resolving trade disputes, and the USA proposal for a "sunset clause" that would automatically terminate NAFTA in five years absent a new endorsement from all three countries.

Kind said Lighthizer was "hopeful" that he could rebalance the trade agreement to ensure bipartisan support.

"We of course will continue to engage in negotiations, and I look forward to working with my counterparts to secure the best possible deal for American farmers, ranchers, workers, and businesses", he said.

Some fear delay will add political unpredictability, since numerous politicians now involved will no longer be in politics next year: Mexico will have a new administration, the USA will have a new Congress after midterm elections, and several senior American lawmakers are retiring. The current frontrunner in Mexico's July 1 presidential election, left-leaning Andrés Manuel López Obrador, has pledged to stamp his own imprint on the deal, promising to appoint a new trade negotiator to this end if elected.

Canada's case lay on a strand of seemingly linear logic.

Dan Ujczo, an global trade lawyer, told Politico that to reach an agreement, negotiators may have to concede to a "skinny NAFTA", one without addressing key issues including reducing the trade deficit, preventing job outsourcing and providing better market access to Canada for USA dairy farmers.

Notwithstanding this, major sticking points remain - among the most prominent of which is the USA proposal for a five-year sunset clause whereby the renegotiated agreement would automatically terminate unless all three countries explicitly agree to renew it.

"We will reach a deal when the deal is a good one", he told Mexican TV network Televisa.

Trudeau admitted to being unsure whether a deal would take days, weeks, or be put off indefinitely. "We didn't get there last week, but we will keep trying to achieve it".

In Mexico, officials on Thursday downplayed the importance of Ryan's deadline.

The prime minister explained Canada's opposition in real estate terms.

Mexican officials - including the economy secretary, Ildefonso Guajardo, who is leading the Nafta talks - have insisted that the negotiations be confined to the content of the agreement itself, and not include immigration. "But a clarification is necessary: any renegotiated NAFTA that implies losses of existing Mexican jobs is unacceptable", he said.

Now it appears the settling in for harder bargaining on issues like pharmaceuticals, dairy, and online duty-free purchases.

Lighthizer's statement also did not mention the threat of steel and aluminum tariffs - which are, at this point, scheduled to take effect June 1.

Ryan's Thursday deadline isn't exactly binding. On Thursday, he revised that slightly.

U.S. House Speaker Paul Ryan said a NAFTA deal would have to be reached by Thursday of this week in order for Congress, which is controlled by trade-friendly Republicans, to hold a vote on the revised agreement by the end of this year.

Some in the Canadian government have mused about the potential strategic benefits of dragging out the talks.

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