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What’s happening with NAFTA as the 6th round of talks comes to Montreal, Jan. 23-28?

The sixth round of negotiations on the North American Free Trade Agreement (NAFTA) will take place at the Hôtel Bonaventure (900 Rue de la Gauchetière O) in Montreal from Tuesday January 23 to Sunday January 28.

Mainstream media coverage over the last several days has focused on speculation that US President Donald Trump could trigger the six-month exit clause in the deal later this month. That is a real possibility, although just yesterday Trump suggested in an interview with the Wall Street Journal that he could wait until July to do that.

The Canadian Press reports, “Insiders familiar with the Mexican negotiators’ strategy are adamant: they will leave the negotiating table if Trump triggers Article 2205 [the withdrawal provision]. The Mexicans have said this publicly, and sources there have been even more explicit in private conversations. The Canadian government has been far cagier when asked what it would do next. But people familiar with its intentions say it would likely stay at the table and keep talking.”

Yesterday morning, Foreign Affairs Minister Chrystia Freeland commented, “Our approach from the start has been to hope for the best, but prepare for the worst, so Canada is prepared for every eventuality.”

According to news reports, the Trump administration has maintained its position on these ‘poison pill’ issues:

1- The administration says that countries should be allowed to opt out of Chapter 11 dispute-resolution panels, which allow corporations to sue governments for political decisions that hurt their business.

2- It wants all of Chapter 19, which governs dispute panels that Canada has successfully used to challenge American tariffs on softwood lumber, to be simply struck from the agreement.

3- Chapter 20 panels, which adjudicate trade disputes between governments, be demoted to an advisory role, allowing a losing country to disregard their decisions and retaliate against the other country.

4- Vehicles made in Canada and Mexico contain at least 50-per-cent U.S. content in order to qualify for duty-free shipment throughout the NAFTA zone, a requirement that would not apply to vehicles made in the United States, while North American content in all NAFTA zone autos would rise from 62.5 per cent to 85 per cent and every component of a vehicle – down to the steel – would count toward that total.

5- The administration has demanded that Canada and Mexico be barred from receiving any more in government contracts, dollar-for-dollar, than American companies receive in those two countries.

This morning, The Globe and Mail’s chief political writer Campbell Clark commented, “You can bet Prime Minister Justin Trudeau and Foreign Affairs Minister Chrystia Freeland, at a cabinet retreat in London, Ont., are fielding calls and messages from worried business leaders. They are entering the steel-testing period of the talks to renegotiate NAFTA, when the fear will become palpable.”

Campbell pointedly asks these key questions, “How will Mr. Trudeau and his Liberal government react? Will they hold to a tough line, or scramble to give the United States some concession to make a deal?”

Yesterday, Freeland said, “When it comes to the more unconventional U.S. proposals, we have been doing some creative thinking. We’ve been talking with Canadian stakeholders, and we have some new ideas that we look forward to talking with our U.S. and Mexican counterparts about in Montreal.”

Those “new ideas” have not been made public.

The Globe and Mail reports, “Canada is working on a proposal to boost the amount of North American-made content in cars and trucks manufactured in the NAFTA zone, sources say, in a bid to break the deadlock over one of the most contentious subjects in the trade deal’s renegotiation. Ottawa is also crafting a series of potential compromises on the North American free-trade agreement’s dispute-resolution provisions, another major sticking point in the talks between Canada, the United States and Mexico. …One source said Canada is mulling various ideas on NAFTA’s dispute-settlement provisions – chapters 11, 19 and 20 – but has not decided what exactly to propose.”

Thousands of people have signed this online action alert calling for an end to the controversial Chapter 11 investor-state dispute settlement provision in NAFTA, as well as an end to the energy proportionality provision (which confounds our ability to meet the emission reduction target in the Paris climate agreement) and for references to water as a tradable good, service and investment to be removed.

None of those demands have been accepted by the Trudeau government.

The Council of Canadians will be at the ‘Montréal rally on NAFTA and the Paris Climate Agreement’ on Saturday January 27. As noted here, “The theme,of the rally will be NAFTA against the Paris climate agreement.”