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Seven things to know as the 3rd round of NAFTA talks end in Ottawa

The Council of Canadians and allies protested outside the NAFTA talks on September 26.

The third round of NAFTA talks (September 23-27) have now concluded in Ottawa and the fourth round (October 11-15) is on the horizon for Washington, DC. What conclusions can we draw from these past five days?

1- There is a growing sense that there will be no deal

The Canadian Press reports, “The spectre of a U.S. withdrawal by President Donald Trump is looming ever larger, thanks to stalled progress on major issues. …The slow pace of the Round 3 talks is being widely blamed on the lack of concrete American proposals [and there are] fears that an impatient Trump could trigger NAFTA’s withdrawal clause if he doesn’t see a win for the U.S. by the end of the year.” The Globe and Mail’s Chief Political Writer Barrie McKenna comments, “Many among the hundreds who stick close to these talks now believe there will be no deal – and even that the negotiating positions the U.S. put forward this week are really setting the ground for Mr. Trump to trigger a withdrawal from NAFTA.”

2- There is an impasse on labour rights

The Canadian Press notes, “A rift emerged also Tuesday with unions saying Canada was facing opposition from the U.S. and Mexico on its proposal to raise labour standards, targeting what are seen as anti-union practices in more than two dozen U.S. states and improving the plight of Mexican workers. …Sources close to the talks, who were not authorized to speak publicly, said the U.S. is demanding an eight-fold increase in Mexico’s minimum wage, which is currently less than $1 per hour. The Mexican delegation flatly rejected that idea.”

3- There are major obstacles ahead

The U.S. has not tabled specifics on rules of origin (where it wants higher American-made content for cars and auto parts), Chapter 11 and Chapter 19 (the investor-state and state-to-state dispute settlement provisions), and supply management (Canada’s dairy marketing system). The U.S. Department of Commerce ruling against Bombardier will likely only harden differing positions on Chapter 19. The Canadian Press adds, “In addition to failing to provide detail on its position on some of the most contentious issues, Dan Ujczo [an Ohio-based international trade lawyer] said the U.S. has signalled it intends to take a hard line on matters like government procurement [where Canadian companies want to be able to bid on sub-national procurement contracts at the state and municipal level].”

4- Canada’s promise to protect water and the environment rings hollow

The Canadian Press reports, “Environment Minister Catherine McKenna says it’s key to have a chapter on the environment in the renegotiated North American free-trade agreement. McKenna says Canada wants to maintain the ‘right to regulate’ resources such as drinking water.” Specifically she says, “We don’t want to see a Flint, Michigan situation. We have 40 million people who rely on the Great Lakes for clean drinking water.” But with ‘investment protection’ provisions, a proposed regulatory cooperation council, and water considered a tradable good, service and investment in NAFTA, it’s not credible that an environment chapter – should it even make it into NAFTA 2.0 – would provide the protections needed.

5- There are emerging issues of concern, notably privacy rights in the digital age

The Canadian Press reports, “One source, who spoke on condition of anonymity because of the sensitivity of the ongoing negotiations, said he was surprised at how uninformed Canadian negotiators were on establishing new NAFTA chapters for the digital age. The source had the impression Canada was ‘sleepwalking’ on the issue, which has the potential to give the U.S. the upper hand in setting the rules for the new digital economy [and undermine Canadian privacy rights]. The U.S says it wants an end to measures that restrict cross-border data flows and require that data be stored in local computing facilities.”

6- A tight February 2018 deadline given elections in Mexico and the U.S. is creating more doubt there will be a deal

The Globe and Mail’s McKenna says, “The three countries have said they want a deal by February – and that’s not just to suit Mr. Trump’s impatience. Mexico’s presidential election will be held next July, and some fear that if NAFTA isn’t signed and sealed by then, the candidates won’t be able to resist capitalizing on anti-Trump sentiment and opposition to doing a NAFTA deal with the U.S. President. And the U.S. Congress has mid-term elections in November, 2018 – so if a renegotiated NAFTA is going to the Congress for approval, it’s going to be a political football. …Most politicians in the U.S. Congress don’t want to have to say how they would vote on a NAFTA 2.0 – that is, except those that want to kill it.”

7- Trump’s spin on any outcome of the talks will have political ramifications in Canada and Mexico

What if Trump rejects a NAFTA 2.0 for domestic political reasons or hypes a new agreement as a major victory for the U.S.? Peter Donolo, the vice-chair of H+K Strategies, says, “Would the broad Canadian consensus of support for NAFTA survive a heavily-ballyhooed Trump NAFTA victory? And what if NAFTA doesn’t survive? What would our political way ahead be, after having put so many eggs in that one basket?” Donolo adds that with the July 1, 2018 Mexican election on the horizon, “Mr. Trump’s relentless humiliation of that country has already sunk the hopes of the incumbent [NAFTA-friendly] PRI and boosted the chances of leftist Andrés Manuel López Obrador.”

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