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NAFTA: Uncertainty looms as ministers head home from negotiations

Unresolved questions include if an agreement is possible soon, how extensive it might be and whether the US might impose steel and aluminum tariffs


April 30, 2018
The Canadian Press
The Canadian Press

Image: ThinkStock

WASHINGTON—The politicians leading the NAFTA negotiations left Washington without a deal on April 27, under a cloud of question marks about the continental trading relationship.

Canada’s Chrystia Freeland and Mexico’s Ildefonso Guajardo returned home after a week-long round with plans to reconvene around May 7 in hopes of obtaining an agreement this spring.

Left unresolved are questions of whether an agreement is possible soon, how extensive it might be and whether the United States might in the meantime slap its neighbours with steel and aluminum tariffs. That ambiguity appears destined to linger a little longer.

“The imposition of these tariffs is the president’s decision,” one administration official said. “We’ll decline to comment or get ahead of his decisions or announcements.”

Hopes for some clarity about upcoming U.S. policy will turn not only to Trump, but also to U.S. trade czar Robert Lighthizer who is to deliver a rare speech to a pro-business crowd before leaving on a high-stakes trip to China. Top-level NAFTA talks will resume after his return from Asia.

In the meantime, civil servants will continue to work on the technical details of the negotiation, after having been in Washington for two weeks, working through last weekend. Freeland said there were real advances this week, especially on autos.

“If you know a Canadian trade negotiator, please give them a hug. Because they are working 24/7, people are cancelling holidays, people are working weekends,” Canada’s foreign affairs minister said. “At the political level … we will be going home to consult on the significant progress we’ve made this week. Then we will be meeting again in a week or so in Washington.”

A number of other chapters are on the verge of completion, said Guajardo. He specifically mentioned state-owned enterprises, technical barriers to trade, financial services and the environment.

But numerous irritants remain: “Too many issues,” is how he described it earlier this week.

Just between Canada and the U.S., issues like dairy, dispute-resolution mechanisms, a proposed five-year sunset clause, and intellectual property remain unresolved.

The difference on intellectual property was underscored April 27. The U.S. downgraded Canada in its annual rankings on IP performance, allegedly for poor policing of counterfeit goods, weak border checks, online piracy protections, broad use of educational exemptions from copyright laws and policies aimed at reducing drug prices.

In lowering Canada to the so-called priority watch list category, the report said: “There were no known criminal prosecutions for counterfeiting in Canada in 2017, which makes Canada a striking outlier among OECD countries.”

In the past, the Canadian government has brushed off this annual report as a wish-list produced on behalf of companies by the United States government.

All this is happening as the window narrows for a NAFTA agreement in 2018. In addition to the Mexican election, the procedural deadline to get a deal that can be voted on by the current Republican-controlled U.S. Congress is weeks away.

As for the threat of impending tariffs, America’s neighbours reject the idea of using steel and aluminum as a pressure tactic during the negotiations.

“Entirely separate (issue),” Freeland said. “There is no justification whatsoever for tariffs or quotas on Canadian steel or aluminum as a national security consideration. We continue to hold that position.”

The Trudeau government did, however, announce new protections this week to restrict imports of over-produced Chinese steel onto this continent, which is the broader goal of the Trump administration.