First NAFTA renegotiating session concludes in a swirl of rumours

There was little concrete coming out of the first round of bargaining

The first round of NAFTA renegotiations has produced a guarded statement from the three countries and a swirl of rumours about what was discussed and what might emerge in the coming weeks.

Held in Washington in mid-August, the meetings saw trade representatives from Canada, Mexico and the U.S. reopen the trade pact for the first time since its signing in 1994.

The one certainty is negotiators for the three countries will meet again in Mexico Sept. 1 to 5 and then in Canada in late September and back in the United States in October, the statement said. They have a lot of work to do on what issues are to be discussed and in what order.

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“Detailed conceptual presentations were made by the United States, Mexico and Canada across the scope of the agreement, and negotiating groups began work to advance text and agreed to provide additional text, comments or alternate proposals during the next two weeks,” the statement said. “The scope and volume of proposals during the first round of the negotiation reflects a commitment from all three countries to an ambitious outcome and reaffirms the importance of updating the rules governing the world’s largest free trade area. In addition to the negotiations, officials from all three countries continued to engage a wide range of stakeholders, including representatives of the private sector; industry associations; civil society, including labour groups; legislative representatives; and state/provincial officials.

“While a great deal of effort and negotiation will be required in the coming months, Canada, Mexico and the United States are committed to an accelerated and comprehensive negotiation process that will upgrade our agreement and establish 21st-century standards to the benefit of our citizens,” the statement said.

Trump wild card

The biggest question remains whether President Trump will allow the negotiators to do their jobs without interfering by pushing his demands on Buy America policies and trade remedies favourable to the U.S. to the point of derailing the talks. No one seems to think he can restrain himself from meddling in the process even to the point of withdrawing from NAFTA.

Or as he did days after the meeting by repeating his pledge to tear up the NAFTA agreement. That move could place him in conflict with Congress, which could refuse to cancel the law implementing NAFTA, experts say, which would set up court fights between the various parties including the president, industries, and possibly lawmakers.

Trade observer Peter Clark says the opening session produced no movement last week on any issues. “Consensus is a long way off, if it’s attainable at all.”

The divide between Canada and Mexico on one side and the U.S. on the other is telling, he said.

“Canada and Mexico believe their objective is to modernize NAFTA. This means building on NAFTA, bringing in 21st-century issues and seeking important overall improvement. The U.S. is treating the talks as a renegotiation – which would eliminate those parts of NAFTA which the U.S. does not like to rebalance the deal in its favour,” said Clark.

“Canada and Mexico want an everybody-wins result, focused on increasing trade and making NAFTA more acceptable to the general population by making it more inclusive and responsive to society’s evolving needs.”

He said U.S. Trade Rep­resentative Robert Light­hizer’s “introductory speech made it clear that the Trump administration is mired in an outdated, mercantilist win-lose strategy. This is likely not salable, and pushing it too far could jeopardize the livelihoods of tens of millions of American farmers, ranchers and manufacturers on the cutting edge and their workers. Trust and respect are essential in trade negotiations. It is difficult to muster trust when the one doing the demanding is not prepared to discuss those demands, or consider trade-offs to achieve them. Asking for clarification is not obstructionist. It’s what negotiations are about. This is a negotiation, after all. Trust will be difficult to develop as long as negotiations are mired in a swamp of uncertainty. Successful negotiations reflect a balance of rights and obligations. NAFTA is a good example. Lighthizer is trying to rebalance NAFTA by enhancing U.S. rights and increasing Canadian and Mexican obligations.”

“Negotiators will want to get U.S. demands and offers in writing and will be watching carefully for signs of a bait and switch,” he said. “Normally one needs to ensure Congress will buy into the deal. In NAFTA 2.0, POTUS is the wild card. Trust cannot flourish if one is always waiting for the next tweet or eruption from the White House.”

On the agriculture front, reports indicated the U.S. NAFTA will seek to control biotechnology imports and push for a ban on agricultural export subsidies to set a precedent for future trade deals, according to a source familiar with the renegotiation discussions.

Canada is in favour of opening with the TPP proposals for dealing with unauthorized biotech ingredients in crop shipments. American farm groups want NAFTA countries to mutually accept each other’s biotech approvals.

On agricultural export subsidies, the U.S. is pushing for a ban; Mexico is not opposed. Canada, however, would like to maintain the ability to use those subsidies, reports said.

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