Toronto Star | 27 September 2017

Contentious issues lie ahead as Ottawa NAFTA talks end

By TONDA MACCHARLES, BRUCE CAMPION-SMITH

Trade ministers from Mexico, Canada and the United States touted progress at the NAFTA re-negotiating table Wednesday, but admitted they have yet to tackle the make-or-break issues at the heart of a new trade deal.

As the third round of talks wrapped up Wednesday, Foreign Affairs Minister Chrystia Freeland, Ildefonso Guajardo, Mexico’s Secretary of Economy, and U.S. Trade Representative Robert Lighthizer all cautioned that the tough challenges still lie ahead.

Guajardo said while it had been a “highly productive round,” there were clear “differences,” and further progress depended on the willingness of the United States to table specific proposals of what it is seeking in many areas.

“As negotiations move forward, it is important that we have the will to table positions that encourage constructive discussions and programatic solutions, he said. “For the next round in D.C. we will have substantial challenges to overcome.”

Freeland, for her part, said Canada was up against an “unconventional” U.S. administration that is “overtly protectionist” and has pushed an America-First agenda since the 2016 election that saw President Donald Trump elected.

The U.S. has not clarified specifically what it wants to see in a modernized NAFTA in several “potentially most difficult areas,” said Freeland, noting that without formal positions on the table, Canada cannot respond.

Those key areas of dispute where the Americans have tabled no specifics include:

• rules of origin, which the U.S. wants to change to require higher American-made content for duty-free movement of auto vehicles and parts. Canada and Mexico want to retain the current 62.5-per-cent requirement for North American-sourced content.
• dispute settlement mechanisms. The U.S. wants to eliminate the use of binding arbitration panels, and use domestic courts, instead, to resolve state-to-state disputes over anti-dumping or countervailing duties. This is NAFTA’s Chapter 19. It is in theory a deal breaker for Canada and Mexico, but Canada has proposed setting up permanent professional tribunals as the key referee. Another dispute mechanism to resolve disagreements in cases where government regulations or law harm the commercial or trade interests of international investors is also in play at the talks, and the U.S. has proposed no specific text on Chapter 11 either.
• supply-managed agriculture sectors. The U.S. has taken aim at Canada’s dairy markets, complaining that its supply-management system, which restricts U.S. producers’ access to consumers, is unfair. But the Americans haven’t outlined their specific demand here.

Freeland also pushed back at Trump’s “Buy-American-Hire-American” agenda on government procurement contracts, saying “mutual access” was achieved in the Canada-European Union trade deal, and should be achievable within the NAFTA re-negotiation talks. She wants Canadian companies to be able to bid on sub-national procurement contracts at the state and municipal level.

Negotiating teams finalized one section devoted to concerns of small and medium-sized businesses, expect to finish the section on competition in the coming days and advanced discussions on other areas, such as digital trade, telecoms, digital trade, good regulatory practice, and customs and trade facilitation, according to a statement by all three ministers.

The fact that the U.S. has yet to reveal its position on some issues, or set out unreasonably tough expectations on others, sparked questions about Washington’s intentions.

But Freeland said she believed the U.S. was bargaining in good faith, that no party was deliberately slowing the pace, and more progress could be made before the next round begins in Washington Oct. 11.

Lighthizer said that talks are proceeding at an “unprecedented pace,” but he admitted, “There is an enormous amount of work to be done, including some very difficult and contentious issues.”

He reiterated Washington’s agenda is to reduce the U.S. trade deficit and invigorate American industry and ensures “reciprocal market access for American farmers, ranchers and businesses.”

Conservative foreign affairs critic Erin O’Toole questioned the Liberals’ strategy of introducing issues such as gender and Indigenous chapters into the talks from the beginning and failing to “champion” sectors such as the auto industry.

“I’d say we’ve had three rounds of positive discussions, but no progress.

“Three rounds show that, perhaps, the strategy of putting up the so-called ‘progressive agenda’ hasn’t produce results on that, but it certainly hasn’t let them get to the rules-of-origin issue.”