Skip to content

Key developments so far in the 4th round of NAFTA talks

On October 11, petitions from the Council of Canadians and numerous allies calling for the Chapter 11 ‘investor-state dispute settlement’ provision to be removed from NAFTA were delivered in Washington, DC.

There have been a number of key developments midway through the October 11-17 round of NAFTA talks now happening in Arlington, Virginia.

1- U.S. content requirements for auto sector

The CBC reports, “A source with direct knowledge of the talks says the Americans unveiled Friday their protectionist requests that would boost the overall North American content requirements from 62.5 per cent to 85 per cent. The changes would apply to automobiles, trucks and large automobile parts. …The Americans also want a country-specific change that would increase U.S. content requirements to 50 per cent in the first year of the new deal.” The Canadian Press adds, “The proposal is viewed as a non-starter by virtually every party involved in automobile production: Canada, Mexico, U.S. industry, and even labour groups were calling the proposed numbers completely impractical.”

2- Five-year sunset clause

Earlier this week, the Toronto Star reported, “U.S. President Donald Trump’s administration began the latest round of talks by making a proposal loathed by Canada and Mexico: a ‘sunset clause’ that would automatically terminate the agreement in five years if all three countries did not approve it again. Jerry Dias, president of Unifor, said he would support a sunset clause on a bad final deal, oppose it on a good final deal. …The sunset clause was endorsed by Canada’s United Steelworkers. National director Ken Neumann said the threat of termination would ‘add some accountability’ for politicians making the kinds of promises the original NAFTA has not fulfilled.”

3- Diafiltered cheese-making products

The Canadian Press adds, “The proposal came as the U.S. made its first significant move on dairy, a traditional sticking point with Canada. Insiders said Friday the U.S. has asked Canada to eliminate its new rules benefiting domestic producers of diafiltered cheese-making products.” Earlier this year, a national ingredients strategy was implemented in Canada that effectively meant the price for diafiltered milk, which is used to make cheese, yogurt and other dairy products, dropped to the international price of milk products. By now being sold at prices competitive with international rates, diafiltered milk has put a dent in the multi-million market previously available to U.S. dairy producers.

4- Supply management, Chapter 19, Chapter 11

The Globe and Mail notes, “The Americans are expected to table demands this weekend that Canada open up its protected dairy, poultry and egg markets to more U.S. imports. It is also expected to formally demand the abolition of Chapter 19 dispute resolution panels, which settle trade disputes between countries, and the right of countries to opt out of Chapter 11 [the controversial investor-state dispute settlement provision], which allows corporations to sue governments for decisions that hurt their business.”

5- Agricultural and regulatory provisions

Earlier today, Friends of the Earth senior trade analyst Bill Waren commented, “Donald Trump’s effort to renegotiate the North American Free Trade Agreement will put sustainable family farms at risk if it incorporates agricultural and regulatory provisions of the failed Trans Pacific Partnership (TPP) trade pact. A new NAFTA built on the TPP model will encourage a proliferation of factory farms that will ramp up air and water pollution, the inhumane treatment of animals, deforestation, and massive use of environmentally-hazardous fertilizers, pesticides, and fossil fuels.”

6- Trump’s negotiating approach

Toronto Star columnist Thomas Walkom writes, “[Trump’s] strategy has been to make maximal yet unyielding demands. If Canada and Mexico agree to these demands, then Trump wins. If they don’t agree and NAFTA falls apart, Trump also wins.”

7- Trump deliberately trying to derail NAFTA?

Walkom also comments, “When Trump calls the pact tying together the economies of Canada, Mexico and the U.S. the worst deal ever, he means it.” CBC adds, “Trump’s threats are being taken seriously by members of the government’s NAFTA advisory panel, including former Conservative cabinet minister James Moore. ‘I think it’s a real threat and the odds are even, frankly, that it may happen’, Moore [says].” And another Toronto Star article notes, “[There is] a growing consensus around the continent that the talks might fail because of Trump’s protectionism.”

8- If no NAFTA

The Globe and Mail reports, “Canada’s economy would take a hit from the demise of NAFTA, but the impact would be ‘fairly small in the long run’, according to Dan Ciuriak, a former deputy chief economist at Foreign Affairs and International Trade [who is now working with the right-wing C.D. Howe Institute]. …Under WTO rules, for example, the U.S. tariff on cars would climb to 2.5 per cent from zero and to 3.5 per cent from zero on many parts. …Canada would lose access to NAFTA’s dispute-settlement regime – Chapter 19 – as well as the deal’s government purchasing rules. But those losses would be mitigated by WTO rules, including access to dispute-settlement panels.”

9- Next rounds

The current round is expected to conclude on Tuesday October 17. From there, the talks are likely to be as follows:

October 29-November 2 – fifth round in Mexico

November 16-21 – sixth round in Canada (most likely Ottawa again)

December 6-10 – seventh round in the US (possibly in Detroit)