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Nine sticking points in reaching a NAFTA 2.0 deal

Council of Canadians honorary chairperson Maude Barlow says, “The Trudeau government talks a lot about progressive trade but as a first step to reach an agreement that is actually progressive, the Chapter 11 investor-state dispute settlement provision and the energy proportionality rules that prevent us from meeting our international climate commitments need to be removed.”

The Canadian Press reports on some of the “flashpoints” that prevented a NAFTA deal being reached last week:

1- Autos – the United States “still wants 40 per cent of every car built in a high-wage jurisdiction; 75 per cent of all parts to be North American; and 70 per cent of steel to be North American”

2- Pharmaceuticals – the “stated goal of U.S. trade policy to make other countries pay more for drugs [which is] in direct conflict with the Trudeau government, which wants to create a national pharmacare plan”

3- Dairy – “the U.S. has demanded an end to surplus sales, and also an end to supply management within 10 years”

4- Dispute settlement – “the U.S. wants to weaken [Chapter 11 that lets companies sue governments for unfair treatment and Chapter 20 that lets countries sue countries] and entirely end Chapter 19 [that lets industries fight punitive duties]”

5- Online spending – “Americans are allowed to spend $800 online before they pay duties on a foreign purchase; Canadians can spend $20 [the U.S. says its amount doesn’t need to be matched but a 40-fold difference is unreasonable]”

6- Intellectual property – “the U.S. complains about Canada’s border controls on counterfeit goods [and] bemoans what it calls excessive use of education-related exceptions to copyright laws”

7- Procurement – the U.S. “wants to limit the access Canadian and Mexican companies already enjoy at the federal level, restricted to whatever amount of contracts American companies win in the other countries”

8- Sunset clause – “the U.S. has pushed for a clause in the deal that would cancel NAFTA after five years, unless every country agrees to keep it”

9 – Professional visas – “Canada wants to modernize the list of professions eligible for a NAFTA work visa under Chapter 16 [but] the U.S. has put up some resistance, as any expansion of work-related migration risks being wrapped into the heated U.S. immigration debate”

On Thursday, Prime Minister Justin Trudeau said, “We are close to a deal. We are down to a point where there is a good deal on the table.” And on Friday, Mexico’s Economy Minister Ildefonso Guajardo said, “There are lots of issues to be resolved, but they’re issues of ‘yes or no’ and don’t need technical sophistication. It’s an issue of having the political will.” But U.S. Trade Representative Robert Lighthizer says, “The NAFTA countries are nowhere near close to a deal. There are gaping differences.”

At this point, it’s not clear what the next steps in the talks will be given U.S. House of Representatives Speaker Paul Ryan’s deadline of May 17 has now passed, U.S. president Donald Trump’s threat of imposing damaging steel and aluminum tariffs on June 1, and the Mexican election on July 1.

There is still the suggestion that a deal could be reached over the next ten days, but it’s unknown how that would be formally achieved.

For more of our analysis on NAFTA, as well as how you can take action to end Chapter 11 and find out more about energy proportionality, click here.