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Second round of NAFTA talks conclude with “regulatory cooperation” and energy provisions on the table

Hundreds of small farmers and union members rallied this week in front of Mexico’s legislature to demand that NAFTA be renegotiated to benefit workers.

The second round of NAFTA renegotiation talks concluded yesterday in Mexico City – with the third round set to take place on September 23-27 in Ottawa (most likely at Old City Hall at 111 Sussex Drive).

The Toronto Star reports, “Canada, the US and Mexico put a positive spin Tuesday on what sources say was a tough five-day round of negotiations to rewrite North American free trade rules. ….A joint statement issued by [Canadian Foreign Affairs minister Chrystia Freeland, US Trade Representative Robert Lighthizer and Mexican Secretary of the Economy Ildefonso Guajardo] emphasized that ‘important progress was achieved in many disciplines’ and said more is expected in the coming weeks as negotiators take a break to consult with their respective industry associations and political decision-makers.”

Sticking points?

But that article comments, “It was a diplomatic dance that belied many of the difficulties behind the scenes. Sticking points include the US insistence on gaining greater access to Canada’s dairy and poultry sectors, its demand to end [the Chapter 19 state-to-state] dispute resolution processes, and its demand that ‘Buy American’ provisions — whether for auto parts or for government procurement projects — be protected.”

The Globe and Mail adds, “For all the talk of progress, the countries are separated by vast gulfs on the most contentious files. The United States has signalled it will demand an American-content requirement in autos manufactured in the NAFTA zone; demanded that Canada’s protectionist system of supply management for milk, eggs and poultry be loosened; and pushed for the gutting of the Chapter 19 dispute-resolution system that Canada and Mexico insist on, sources with knowledge said of the closed-door talks. The round ended without the United States providing specific numbers on the American-content requirement, detailing exactly how it wanted supply management loosened or proposing an exemption for ‘Buy American’ laws from government contracting rules, the sources said.”

On Monday, the Canadian Press reported, “Negotiators have run into a series of early sticking points on nearly every major element considered key to achieving a new NAFTA agreement… A recurring pattern involves one country raising a prized priority only to have other parties systematically refuse to engage the conversation…”

The anonymous source cited in that article noted that the US refused to discuss Canada’s request for greater access to professional visas, while Canada refused to discuss to engage in discussions on US opposition to Canada’s supply-management system. That news report also highlights that other sources say Canada wants the US to sign a series of international labour agreements it has yet to approve and to change labour laws in Mexico to increase the salaries of auto workers, but the US sees those demands as a non-starter and Mexico is opposed to labour changes as well.

Areas of agreement

That all said, late yesterday the Associated Press reported, “Text was coming together for most chapters of the treaty, including small and medium enterprises, competitiveness, digital trade, services and the environment.” The Globe and Mail notes there is also broad agreement on “modernizing the agreement to cover the digital economy and cutting red tape for exporters and importers.”

“Regulatory cooperation”

World Trade Online notes, “The Canadian government is pushing for stronger regulatory cooperation provisions during the second round of NAFTA renegotiation talks, hoping to move beyond the US.-Canada Regulatory Cooperation Council established by the Obama and Harper governments in 2011, according to Canadian stakeholders. Canada is looking to include in NAFTA requirements for a regulatory cooperation council that is led at the political level, meets regularly and establishes agendas for future outcomes.”

Friends of the Earth highlights, “It has been reported that Canadian negotiators have pushed for ‘regulatory review’ language that threatens sensible food, biotechnology, and other environmental regulations.” Our ally Bill Waren, their senior trade analyst, comments, “Regulatory review based on the failed Trans Pacific Partnership and the harmful Canada-European Union [CETA] trade deals will stymie new public interest regulations before they can be proposed to the public.”

It’s hard to imagine US President Donald Trump not supporting trade disciplines that further deregulation given what we have seen of his domestic agenda.

No controversy on energy provisions

The Globe and Mail reports, “The three countries broadly agree on energy, which involves bringing Mexico’s rapidly opened oil and gas market into the deal…”

With respect to energy, AP reports that the Mexican Secretary of the Economy stated that “there are no points of difference or controversy” and that the main question is whether energy should have its own chapter or be spread across all chapters. This is concerning given speculation that all three countries support entrenching Mexico’s neo-liberalization of its energy sector into NAFTA as well as bringing Mexico under NAFTA’s energy proportionality provision. None of the media commentary has reconciled this consensus with Canada pushing for climate change to be included in NAFTA (other than to suggest Freeland is playing to a domestic audience and will drop the demand at some point).


Overall, CTV quotes Robert Holleyman, an Obama-era deputy US trade representative, who says, “I think Canada is being quite smart. Minister Freeland understands that 80 per cent of what is going to be in the renegotiated NAFTA has already been agreed to when the three countries, in October 2015, concluded the Trans-Pacific Partnership.”

The Council of Canadians will be mobilizing for the talks in Ottawa and continues to call for the Chapter 11 investor-state dispute settlement mechanism, clauses relating to water as a service, investment and good, and the energy proportionality provision to be removed from NAFTA 2.0. We are also calling for greater transparency in these talks. That would include the Trudeau government making public the two dozen texts that have been tabled by the three countries during these talks. Those texts are reportedly now being merged into a single document for the Ottawa talks.

We also believe – as asserted by Unifor with their demand for labour standards in the deal and the Canadian Centre for Policy Alternatives with respect to Chapter 19 and other provisions – that the Trudeau government should be prepared to walk away from a bad deal at the conclusion of the talks expected as early as December of this year.