[CTC] Finish NAFTA By End of Year

[Arthur Stamoulis]

Washington Trade Daily
Volume 26, Number 145 Friday, July 21, 2017
 
Finish NAFTA By End of Year
Renegotiation of the North American Free Trade Agreement needs to be done by the end of the
year in order to quell the business uncertainty that is already causing lost sales and investment, the
ambassadors of Canada and Mexico said yesterday (WTD, 7/20/17).
 
Meeting that time line will be a challenge, especially given the comprehensiveness of the US
goals for a new NAFTA released Monday, Canadian Ambassador David MacNaughton acknowledged.
But the ambassador said he believes a year-end deal is possible because all three countries
understand that the uncertainty over the future of NAFTA is causing companies and investors to hesitate
about making business decisions.
 
Investment decisions throughout North America have been postponed because of the uncertainty
about NAFTA – and that is not good at a time when all three countries are trying to create more highpaying
jobs, Mexican Ambassador Geronimo Gutierrez added. For Mexico’s part, it also is important to
conclude the talks before they bleed into next year’s Presidential elections, he said.
 
The two ambassadors spoke at a program sponsored by the Washington International Trade
Association.
 
Press reports from Mexico Wednesday said the three countries have agreed to hold seven rounds
of negotiations by the end of this year. But Mr. Gutierrez told reporters that officials are still in the
process of refining a schedule. “All we know at this point is that the negotiations will start on
August 16,” he said.
 
The US Trade Representative’s office announced Wednesday that the first round of talks will be
held August 16 to 20 in Washington.
 
Asked about the year-end goal, USTR Robert Lighthizer’s spokeswoman pointed to his
testimony last month before the Senate Finance Committee where he said there is no deadline as far as
the Administration is concerned. “We’re going to do it as quickly as we can, but without any artificial
deadline of the end of this year,” he said.
 
TPP – A Head Start
 
Helping the negotiations along will be the fact that the three countries already agreed to many
issues in the TransPacific Partnership, Ambassador MacNaughton said. Negotiators also could turn to
other existing trade deals – like Canada’s FTA with the European Union – for text. Mexico’s
Ambassador cautioned, however, that while the TPP is a good reference point for discussion, the
concessions in the agreement were based on gaining market access to 12 countries and will not
necessarily translate into a trilateral deal.
 
Both ambassadors said they have concerns about the Trump Administration’s decision to make
reducing the US trade deficit a key negotiating objective. That objective really is aimed at Mexico,
which has a goods trade surplus with the United States. But Washington has surpluses in services and
tourism, Mr. Gutierrez noted.
 
If the United States wants to talk about trade deficits, Ottawa would be happy to hear how
Washington intends to reduce its trade surplus with Canada, Ambassador MacNaughton joked.
 
Canada does have some concerns about the Administration’s proposal to eliminate NAFTA’s
Chapter 19 dispute settlement mechanism for dealing with trade remedy decisions, the Canadian
ambassador said. It is certainly possible to improve Chapter 19, but Canada believes some form of
dispute settlement for antidumping and countervailing duty cases is warranted.
 
A new NAFTA needs to be a “win-win-win” for all three countries, Mr. MacNaughton said. But
given the importance President Trump put on making trade fairer for the United States in the campaign,
Canada and Mexico will have to help the President sell NAFTA to his political base. “We have to find
ways where he can declare victory without it being seen in either Mexico or Canada as being a loss,” he
said.
 
Many do not realize how close President Trump came to actually pulling the United States out of
NAFTA earlier this year, Ambassador Guitierrez stated. That risk still exists if Mr. Trump is not happy.
 
But Mexico would not be willing to come to the negotiating table if it felt Washington is holding the
threat of withdrawal over its head, he said.
 
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