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Canada-U.S.-Mexico talks to renegotiate NAFTA could soon be just 90-days away

Robert Lighthizer (the United States Trade Representative) and Steve Verheul (who will reportedly be Canada’s chief NAFTA negotiator)

The formal negotiations to renegotiate the North American Free Trade Agreement (NAFTA) could start as soon as mid-August.

The Canadian Press reports, “The [U.S. Senate] voted with a large bipartisan majority Thursday to approve Robert Lighthizer, which gives the administration its U.S. trade representative and allows it to kick-start its NAFTA process. …[U.S. President Donald Trump] told an interview with The Economist that he intends to proceed quickly after Lighthizer’s confirmation: Trump intends to file a 90-day notice with Congress, work with it on negotiating priorities, and start talks with Canada and Mexico later this year. ‘The clock starts ticking [with Lighthizer’s confirmation]’, Trump told the magazine, before the vote.”

That article adds, “The administration has begun signalling that it wants significant changes in a range of areas, including dairy, lumber, automobiles, pharmaceuticals and the dispute-resolution system. Trump interjected when an interviewer suggested it sounds like he wants a big renegotiation. ‘Big isn’t a good enough word’, the president replied. ‘Massive’. But that desire for a ‘massive’ renegotiation is butting up against the mundane realities of the political calendar. The U.S. and Mexico have both expressed a desire to get a deal by early next year, before the Mexican election. Few observers believe a substantive renegotiation is possible within a few months.”

What are the “massive” changes to NAFTA that Trump and Lighthizer might seek? Last March a draft eight page letter to Congress from the acting US Trade Representative was leaked that outlined 40 U.S. negotiating objectives. That letter listed:

  • elimination of the Chapter 19 state-to-state dispute settlement provision

  • an end to non-tariff barriers in agriculture (supply management)

  • a border adjustment tax on foreign imports from Canada and Mexico

  • increased duties on imports unless they contain a higher level of U.S. content

  • a preferential ‘Buy American’ policy for government purchases

  • an ability to ‘safeguard’ against a flood of Canadian or Mexican imports

The Canadian Press article notes that regulatory co-operation could be a part of these talks too. It notes, “Canada is already working with the U.S. to eliminate red tape on products. Now that Trump is looking to slash two regulations for every one he creates, Canada could just hand him the credit.”

The Canadian-American Business Council says, “President Trump is eager for some wins. The Canadian government could present the United States with a proposal for aligning a particular set of regulations. This would represent a bilateral victory for what is at the moment a U.S.-only effort to cut regulatory red tape.”

It should be remembered that regulatory co-operation was a key part of the failed Canada-U.S.-Mexico Security and Prosperity Partnership (SPP) talks. When the SPP talks were launched back in 2005, Canada’s stricter regulations on pesticide residue levels on fruits and vegetables were identified as “barriers to trade”.

In a recent op-ed in the Toronto Star, Scott Sinclair from the Canadian Centre for Policy Alternatives also suggests that rules of origin (higher U.S. content quotas for duty free access), Chapter 19, Buy American purchasing policies, and supply management for dairy farmers could all be on the table.

And he highlights, “Commerce Secretary Ross says Canada has an ‘anti-patent’ position when it comes to pharmaceuticals, which is both false and worrisome. It would be exorbitantly expensive for Canadian consumers and our health care system if we gave in to pressure to align our system with excessive patent protection in the U.S.”

Sinclair concludes, “It is not too early to be considering an exit strategy. If NAFTA were to come apart, perhaps through an executive order from Trump if Canada or Mexico balks at U.S. demands, WTO-bound tariff rates would then apply. This would be disruptive, but not catastrophic. …If an ‘America First’ NAFTA would be worse for Canada than the multilateral alternative, we can and should walk away from the table.”

Montreal-based Council of Canadians trade campaigner Sujata Dey along with two members of our Northumberland chapter, Rick Arnold and Bev Burke, will be strategizing scenarios such as this at the ‘Trinational Meeting of Social Movements from Canada, Mexico and the United States on NAFTA’ this coming May 26-27 in Mexico City. We will also soon be releasing fact sheets and handimation videos on NAFTA, as well as launching a lobbying campaign on June 26 directed at Members of Parliament.

To call on the Trudeau government to remove Chapter 11, energy proportionality and water from NAFTA, please click on this online action alert.