[CTC] USTR expects to table texts in 'lots of areas' at NAFTA round; will push for currency provisions

[Arthur Stamoulis]

INSIDE US TRADE
USTR expects to table texts in 'lots of areas' at NAFTA round; will push for currency provisions

August 15, 2017 
U.S. negotiators are expecting to table negotiating texts across a broad range of issues at this week's inaugural NAFTA renegotiation round, including a push for rules on currency manipulation, according to a USTR official.

During a background press call on Tuesday, a USTR official said the familiarity the U.S. has with Canada and Mexico will allow it to table text at the first negotiating round, but declined to specify what texts would be proposed or exchanged.

“We are actually going to be quite ambitious in this first round,” the official said. “Lots of negotiations start with a discussion of background, rules and regulations, exchanging trade data and so forth. We have the advantage of having a trade agreement in place for a long time that allows us to move pretty quickly to the tabling text process. We expect the tables to be pretty covered over the next five days.”

The official said the first round would cover an array of issues including market access, state-owned enterprises, digital trade, labor and environment, currency manipulation, and trade remedies.

“We hope to expand market access for U.S. agriculture,” the official said. “NAFTA is an old agreement that doesn't cover a lot of the economy that now exists so we expect to add a chapter on the digital economy. We will be incorporating and strengthening labor and environment side agreements into the agreement. We will be calling for the establishment of appropriate mechanisms to combat currency manipulation and we will be strengthening trade remedies, including [allowing] the United States to vigorously enforce its trade laws.”

The U.S. has never before included provisions on currency manipulation in a trade agreement, in part because of claims that such provisions could have the unintended consequence of hamstringing U.S. monetary policies. The NAFTA negotiating objectives released last month by the Trump administration instructed negotiators to, “Through an appropriate mechanism, ensure that the NAFTA countries avoid manipulating exchange rates in order to prevent effective balance of payments adjustment or to gain an unfair competitive advantage.”

U.S. automakers have pushed for currency provisions in NAFTA as a way of creating a model for future U.S. trade agreements since Canada and Mexico have generally not been criticized for manipulating their currencies.

Automakers made a similar push for currency provisions in the Trans-Pacific Partnership. The Obama administration did not include currency provisions in TPP, but instead negotiated non-enforceable currency provisions in a joint declaration signed by the 12 TPP countries.

When asked if the administration would put forward proposals to eliminate NAFTA's dispute settlement for trade remedy cases -- established by Chapter 19 of the deal -- or to specifically allow for Buy American provisions, the USTR official suggested the proposals could cover those areas.

“We are preparing for a very comprehensive and high standard agreement,” the official said. “We expect to table quite a lot of text at this first round and that would cover a lot of the chapters that I'm sure will address the issues that you raised and many others besides. We have an ambitious schedule here and the best way to drive to that scheduled conclusion is to begin broadly with tabling text in a wide range of the chapters we expect the final agreement to cover.”

The official later added the administration's belief that Canada and Mexico share the U.S.' ambition in terms of scheduling and could also table negotiating texts at the first round.

Before USTR can table text, it must consult and make the text available to Congress. One source speculated this requirement could lead to a delay in USTR tabling text because making the text available to Congress in the middle of August when few lawmakers are in town would not be a sign of “good will.” Congressional Democrats have made their displeasure with the Obama administration’s practice of dropping text immediately before tabling it well known, and continuing that practice would not aid in USTR's efforts to gain Democratic support of the renegotiated NAFTA, which they believe is possible, the source said.

However, Congress has already vetted text put forward in the context of TPP and USTR could put forward the non-controversial TPP chapters -- such as customs and trade facilitation, sanitary and phytosanitary provisions, and digital trade, the source said.

USTR will also adhere to some broader objectives throughout the negotiating process, including addressing the U.S.' overall trade deficit, and strengthening the U.S. manufacturing sector, the USTR official said.

The official also said the administration has not yet made a decision on its stance on NAFTA's investor-state dispute settlement mechanism, an often criticized element of U.S. trade deals. One source suggested the Trump administration could target ISDS as a way to appease members of Trump's base, who voted for Trump because of the anti-trade rhetoric he used during the campaign. -- Brett Fortnam (bfortnam at iwpnews.com <mailto:bfortnam at iwpnews.com>)


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