NAFTA: Countries Admit Talks Struggling, Deadline Pushed Into 2018

WASHINGTON— The tensions at the NAFTA negotiating table have exploded into public view.

The latest round revealed enormous chasms in negotiating positions on everything from dairy, autos, and Buy American rules to even the basic architecture of an agreement—and it was reflected in an awkward joint news conference Oct. 17.

U.S. Trade Representative Robert Lighthizer said the other countries are struggling to accept the reality that the United States wants to rebalance its trade agreements. He said other countries and industries must stop counting on easy export access to the U.S. market.

“Frankly I am surprised and disappointed by the resistance to change from our negotiating partners,” he said, with his Canadian and Mexican colleagues on either side.

“We have seen no indication that our partners are willing to make any changes that will result in a rebalancing.”

He urged all sides to consider being more flexible before the talks resume again in Mexico next month. The next round starts Nov. 17, three weeks later than the original anticipated Oct. 27 start date. This means talks will be extended into 2018.

Foreign Affairs Minister Chrystia Freeland sounded a marginally more diplomatic note. She said it’s actually a positive development that the countries have agreed to extend talks through the first quarter of 2018, allowing more time.

The countries had initially set an end-of-year target for completing a deal because of fear that any further delay could stall the process, or at the very least delay it into 2019—as the political systems of Mexico and the United States will soon be seized by national elections.

But she appeared to blame the United States for a lack of progress.

“Vice-President Mike Pence [said this summer] that he believed a win-win-win outcome would be achieved in these negotiations. Canada believes that too,” she said.

“But that cannot be achieved with a winner-take-all mindset or an approach that seeks to undermine NAFTA rather than modernize it. … We’ve … seen a series of unconventional proposals in critical areas of the negotiations that make our work much more challenging.

“We have seen proposals that would turn back the clock on 23 years of predictability, openness, and collaboration under NAFTA. In some cases these proposals run counter to WTO rules. This is troubling.”

The ministers even disagreed onstage about the most basic economic theory. Freeland brushed off the importance of trade deficits, a Trump administration obsession which a number of economists—and Freeland herself—discount as a cause of trouble for the U.S. economy.

Lighthizer stared at her when he spoke next, and said: “For us, they do matter.”

The Trump administration insists reversing the long-term imbalance of imports-versus-exports matters to U.S. prosperity, and although NAFTA partners represent only a small share of that imbalance, and even though Canada arguably doesn’t contribute to it at all, Lighthizer said it’s a change they must accept.

The United States has surprised its neighbours by proposing things like a sunset clause that could end NAFTA in five years unless all three countries agree to extend it, and a near-total gutting of the agreement’s enforcement mechanisms.

This has made it explicitly clear the United States doesn’t envision the easy negotiation other countries had hoped for, and which some Americans themselves had hinted at. That includes President Donald Trump, who recently said he only wanted minor “tweaking” to trade with Canada.

That happy-talk completed faded at this last week-long round in Washington.

Mexico’s Economic Secretary Ildefonso Guajardo acknowledged the bargaining would be difficult. He said obstacles to progress remain and that all sides need to work toward constructive solutions.

He urged countries to pursue a “win, win, win”—not a “lose, lose, lose.”

“We must understand that we all have limits,” Guajardo said. “We must ensure the decisions we make today do not come back to haunt us tomorrow.”

From The Canadian Press