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Trump seeks ‘America First’ changes in NAFTA talks that could start this summer

The Trump administration has signalled to the US Congress its intention to seek fundamental changes to the North American Free Trade Agreement (NAFTA).


The Globe and Mail reports, “President Donald Trump’s administration wants across-the-board changes to the North American free-trade agreement that would tilt the rules of cross-border commerce more clearly in favour of US business.”

“A draft eight-page letter to Congress from acting United States Trade Representative Stephen Vaughn outlines more than 40 negotiating objectives the White House is seeking as the U.S. prepares to reopen NAFTA in talks with Canada and Mexico. The revisions sought go far beyond the modest ‘tweak’ for Canada that Mr. Trump promised when he received Prime Minister Justin Trudeau in Washington last month.”


The article highlights:
1– “One [objective] that jumps out is a vow to ‘level the playing field on tax treatment’, a phrase long associated with Republican calls for a border adjustment tax that would be imposed on foreign imports.”
2– “The Trump administration says it wants to eliminate from NAFTA the Chapter 19 dispute settlement system, which grants Canadian companies a means of directly appealing decisions by the US government where Washington has slapped duties on their products.”
3– “It also appears to be signalling it wants to hike duties on imports unless they contain a higher level of US content.”
4– “The White House, as well, is seeking changes that would give preferential treatment to the US in government purchasing – a ‘buy American’ measure that would make it harder for Canadian firms to bid on US government contracts.”
5– “And it wants the right under NAFTA to roll back the preferential exemptions Canada and Mexico receive under the deal when it comes to ‘safeguard’ actions where Washington wants to stop a flood of imports.”


And The Globe and Mail’s national business correspondent Barrie McKenna adds:
6 – “It also wants to attack non-tariff barriers in agriculture – a clear warning that the Trump administration intends to target Canada’s highly regulated and protected dairy and poultry sectors.”


McKenna comments, “Don’t be distracted by the jargon about rules-of-origin, trade remedies, procurement and state-owned enterprises contained in the letter to members of Congress. This is essentially a ‘what’s yours is mine and what’s mine is mine’ manifesto. …The Trudeau government can forget its best-case scenario – that all Mr. Trump wants is to modernize the 24-year-old agreement.”


He explains, “Two interrelated US proposals present the biggest threat to Canada. The US wants to get rid of what was the centerpiece for Canada of the original Canada-US trade agreement – namely, the ability of countries to appeal unfair trade actions to a [Chapter 19] independent panel. …The Trump administration would couple that with a special ‘safeguard’ weapon, giving it the power to unilaterally slap tariffs on imports from Canada and Mexico when a US industry is under threat. These two measures would leave Canada dangerously exposed to arbitrary tariffs any time a US industry is feeling competitive pressures from Canadian rivals.”

Timeline

CBC reports, “Now Congress will be involved in revising [this list sent to them by Trump]. Then the administration will issue a formal notice that it wants to renegotiate the deal and spend a minimum of 90 days consulting lawmakers and industry, meaning formal talks with Canada and Mexico could begin in the summer or fall. This preliminary consultation is required under the so-called fast-track law that allows trade deals to pass Congress with a simple majority and an up-or-down vote, with no amendments.”


Former diplomat Colin Robertson has stated, “At the earliest I think the renegotiation—with or without Mexico—will take at least a year, probably 19 months. After that we have to go for ratification, which adds on another year plus. My guess is that NAFTA, or whatever we call it, doesn’t get wrapped up until spring or summer 2019, meaning it will be front and centre in our October 2019 election.”

To tell Prime Minister Justin Trudeau that this renegotiation cannot be another backroom deal — that public consultations are required as well as transparency and accountability throughout the entirety of the process — please send him a message through this action alert.