[CTC] Sources: U.S. expected to pare down NAFTA priorities in logistics-focused first round

Sat Aug 12 07:11:11 PDT 2017

Sources: U.S. expected to pare down NAFTA priorities in logistics-focused
first round
August 11, 2017
IUST

Negotiators will use the inaugural round of NAFTA renegotiation talks to
stake out priorities, establish working groups and construct an agenda for
the rounds to follow, according to sources and analysts who say the U.S. is
likely to pare down its priorities from the summary of objectives it
submitted to Congress in July.

The U.S. list, however, is likely to include revisions to Chapter 19 of the
deal, which provides for a dispute settlement system for trade remedy
cases, and changes to the agreement's rules of origin, these sources said.

The round will kick off on Aug. 16 at the Marriott Wardman Park Hotel in
Washington, DC.

Looming over the negotiations is the possibility that President Trump
interjects with public comments that roil the talks, these sources and
analysts note. However, absent commentary from the U.S. president,
stakeholders believe the round will function much in the same way as
negotiating rounds have under past administrations. At the inaugural round,
negotiators are likely to map out a general plan for how the remainder of
the negotiations will take place, with a goal to conclude them by either
the end of this year or early 2018, sources said.

Reassured by the appointment of John Melle to lead the NAFTA renegotiation
for USTR, sources said they did not expect what one called “fireworks” at
the first round because Melle – the assistant USTR for the Western
Hemisphere – and U.S. Trade Representative Robert Lighthizer are seasoned
negotiators who believe the goal of quickly concluding the negotiations
will be best served by approaching the talks in a traditional manner.

Accordingly, the first few days of the inaugural round are expected to
focus on planning and logistics: Forming working groups to negotiate on
specific issues; having negotiators identify their NAFTA-country
counterparts; and establishing which issues will need more time to
negotiate. Part of this process will require that the parties exchange
topline priorities and initial negotiating positions to determine the
issues that will require the most work. This, in turn, will allow
negotiators to establish a chronology for the talks.

Michael Camuñez, who served as assistant Commerce secretary for market
access and compliance during the Obama administration, said the initial
process could also discussions of which issues will not be addressed in the
renegotiation.

Laura Dawson, a former senior adviser for the U.S. embassy in Ottawa, said
Chapter 19 is likely be an issue that will require significant time and
attention given that it took over a year and a half to negotiate during the
talks that set up the original deal.

Canada and Mexico have both expressed concern about the U.S.' objective to
eliminate Chapter 19. At an Aug. 11 press conference, Canadian Foreign
Minister Chrystia Freeland, Canada's political lead in the NAFTA talks,
said NAFTA's dispute settlement mechanisms were essential to the
functioning of the agreement <https://insidetrade.com/node/159884>.

“Having an effective dispute settlement mechanism is really essential in
any trade deal.” she said. “In the same way that good fences make good
neighbors, a good dispute settlement mechanism makes good trading partners.
So Canada really understands the importance of independent, objective
transparent dispute settlement within NAFA and it's something that we'll be
talking about with our partners and explaining to them.”

Underlying the U.S.' specific priorities is the administration's focus on
reducing its trade in goods deficit. The first listed objective in the
summary of the priorities that the Office of the U.S. Trade Representative
submitted to Congress in July is to “Improve the U.S. trade balance and
reduce the trade deficit with the NAFTA countries.”

Addressing those deficits will likely be part of the issue-specific
negotiations, which are expected to commence in future negotiating rounds,
but could also influence how the U.S. prioritizes its goals from the start,
sources said.

Even if the inaugural round follows a traditional format, the talks promise
to be unlike any prior trade negotiations – in part because the three
countries are renegotiating a major agreement that is already in place, and
in part because Trump has put trade in general, and NAFTA in particular,
high on his list of priorities.

*Missing from the first round is a mechanism to allow for stakeholder input
during the five-day negotiating session,* stakeholders said. Negotiating
rounds under previous administrations have included dedicated stakeholder
sessions in which industry and civil society groups could be briefed by
negotiators. Negotiating rounds also have often included opportunities for
stakeholders to publicly present their positions, with negotiators present.

Mike Dolan, a legislative representative for the Teamsters union, called
the decision to forego stakeholder sessions “concerning.”

Dolan said the union is supportive of making negotiating texts public,
similar to the EU's approach in the Transatlantic Trade and Investment
Partnership talks. During those negotiations, the European Commission
published its negotiating texts, as well as summaries of negotiating
rounds, in the weeks after the talks took place. Canada and Mexico will
also have a say in the level of transparency throughout the negotiations,
Dolan noted, adding that the first round will set the “rules of engagement”
for future rounds.

A lack of transparency could be a benefit to the negotiators, according to
Camuñez, who along with former U.S. Ambassador to Mexico Jim Jones recently
retooled and renamed a consulting group in response to the NAFTA
renegotiations. The more transparency, Camuñez said, “the more likely that
Trump injects himself into the process, which can only be bad for the
process.”

The U.S. administration's failure to date to secure a major legislative
accomplishment could also deter USTR from being too aggressive in the
negotiations, Camuñez said.

“I think had Trump scored a victory in the repeal of Obamacare, had he
already racked up a few legislative accomplishments, the administration
might be feeling much more bullish and aggressive in their willingness to
take a firm stance on some of the political bluster and rhetoric they've
been pushing with Mexico,” he said. “But I think the reality is the
administration has floundered and has virtually no legislative
accomplishments to speak of, and I think that actually works in favor of a
more reasonable outcome for the NAFTA renegotiations.”

Once NAFTA parties have clearly identified their priorities, they could
also seek to identify so-called “low-hanging fruit,” Dawson said. Such
issues could include “imports” from the Trans-Pacific Partnership
negotiations, he added, including chapters on digital trade and e-commerce,
or provisions on customs and trade facilitation.

Camuñez, meanwhile, said he expected the end result to cover the simpler
issues because the U.S. and Mexico are keen to conclude the talks before
the Mexican presidential and U.S. congressional midterm elections in 2018.
The Trump administration could attempt to sell this as a “major
modernization” of the agreement, Camuñez said.

This time line creates a unique negotiating dynamic, Dolan said, because a
party that is eager to wrap up the talks could choose to make concessions
in that interest.

The second round of negotiations will take place in Mexico City beginning
on Sept. 1. – *Brett Fortnam* (bfortnam at iwpnews.com)

Mike Dolan

Teamsters

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