[CTC] NAFTA round extended by two days; Canada & Mexico "Ready for Anything"

Wed Oct 11 15:48:15 PDT 2017

Several articles below…

http://www.huffingtonpost.ca/2017/10/11/at-start-of-trudeau-meeting-trump-hints-at-new-trade-deal-with-canada-if-nafta-talks-fail_a_23240368/ <http://www.huffingtonpost.ca/2017/10/11/at-start-of-trudeau-meeting-trump-hints-at-new-trade-deal-with-canada-if-nafta-talks-fail_a_23240368/>

Trudeau Says Canada Is 'Ready For Anything' After Talking NAFTA With Trump
The president has hinted at a new Canada-U.S. deal.
10/11/2017 14:50 EDT | Updated 6 minutes ago
WASHINGTON — For the first time, Prime Minister Justin Trudeau is acknowledging that the North American Free Trade Agreement could be in trouble.

Trudeau is wrapping up his visit to Washington by saying that while he continues to believe in NAFTA, the federal Liberal government is "ready for anything."

During his visit to the White House earlier today, Trudeau listened intently as U.S. President Donald Trump hinted at the possibility of a free trade deal directly with Canada, should ongoing NAFTA talks collapse.

But the U.S. president also says it's too early to give up on the talks, which resumed today in Alexandria, Va., with negotiators from Canada, the U.S. and Mexico.

Trudeau says Canada remains focused on the NAFTA talks "in a serious way," and convinced that all three parties to the deal could come out of the negotiations as a winner.

But he also says that circumstances are often challenging, and that Canada is ready for anything, even as it continues to work to protect and foster Canadian jobs and economic growth.

http://www.cbc.ca/news/politics/trudeau-washington-trump-ways-and-means-1.4349528 <http://www.cbc.ca/news/politics/trudeau-washington-trump-ways-and-means-1.4349528>

After warm welcome for Trudeau, Trump hints at bilateral trade deal with Canada
Top Republican on Ways and Means Committee says he wants to pry open Canada's dairy sector
The Canadian Press Posted: Oct 11, 2017 1:10 PM ET Last Updated: Oct 11, 2017 2:50 PM ET

U.S. President Donald Trump says he'd be willing to negotiate a free trade deal directly with Canada in the event NAFTA talks fail.

But Trump said it's not yet clear whether talks to renegotiate the North American Free Trade Agreement will succeed.

"We'll see what happens," the president told reporters during a photo op with Prime Minister Justin Trudeau.

"We have a tough negotiation and it's something that you will know in the not too distant future."

The president made the remarks in the Oval Office at the start of a meeting with Trudeau, whose visit coincides with the start of a fourth round of NAFTA talks in nearby Alexandria, Va.

Trump said it's possible the talks to renegotiate NAFTA will fail, but that he could see the U.S. striking a new deal with Canada.

While it's no secret the president is not a fan of NAFTA, it's the first time he's mused publicly about the possibility of a bilateral agreement with Canada.

Earlier this week Trump told Forbes magazine NAFTA "will have to be terminated."

Trudeau meet with key U.S. lawmakers

The prime minister was on Capitol Hill with dozens of members of the powerful House of Representatives committee that oversees trade negotiations.

"The U.S. sells more to Canada than it does to China, Japan and the U.K. — combined," Trudeau said in his opening remarks to the comittee.

"We are already your biggest customer."

Senior members of both major U.S. parties echoed his view that trade with Canada is mutually beneficial.

'No relationship is without its challenges'

But there were also signs of discord: the top Republican says he wants to pry open Canada's dairy sector, the top Democrat wants to see free trade in cultural products and some progressive lawmakers were outside with anti-NAFTA protesters.

Committee chairman Kevin Brady, a Texas Republican, mentioned dairy access; customs barriers; and intellectual property as areas that need to improve.

"America and Canada are great allies. We share the world's longest international border and a remarkably successful and mutually beneficial trading relationship through NAFTA. But no relationship is without its challenges," Brady said.

Brady asked the prime minister to support meaningful change, aimed at more open trade, and added that he's committed to successful negotiations: "When North America wins, America wins."

A Democratic lawmaker said after the meeting that Trudeau maintained his commitment to Canada's supply-management system and pointed out the fact that the U.S. maintains a basket of support programs for its own agricultural industries.

But Sander Levin credited Trudeau's progressive trade policies on labour, the environment and gender rights. He said stronger labour protections will be essential in winning minimal Democratic support that might give an eventual deal the necessary votes to win passage in Congress. Officials within the Canadian government say this is one of the objectives of their so-called progressive trade agenda, one overlooked by critics at home who might not appreciate the need to win some votes from centre-left U.S. lawmakers to ratify the deal.

That partisan uncertainty was underscored Wednesday as Democrats called for open hearings on NAFTA while some party members protested against the agreement on Capitol Hill.

Democrat wants to open trade in culture

Meanwhile, the House committee's top Democrat asked Trudeau to open up the trade in culture — a historically sensitive area in Canada-U.S. trade relations. Richard Neal said he wants to see "our cultural industries go forward with non-discriminatory access to the Canadian ... markets that Canadian creators have here in the United States."

Trudeau's predecessor, former Conservative prime minister Stephen Harper, was scheduled to add his voice to the debate later Wednesday in a NAFTA forum where his allies at home believe he could have a lasting impact. 

Erin O'Toole, the Tory foreign affairs critic, says Harper is an ardent free trader whose voice will help convince congressional and business leaders to preserve and update NAFTA, rather than tear it up, as Trump has repeatedly threatened.

It also doesn't hurt that Harper will be sharing a stage with former Republican House speaker Newt Gingrich, who was arguably the pre-Trump era's most right-leaning American populist politician.

"Mr. Harper is quite well regarded within trade circles. If he can use that platform he has as a former prime minister to remind people in Washington to apply pressure on the White House, I think it's good," O'Toole said.

"Mr. Gingrich is still a voice that gets a lot of attention, especially in Washington. That is good because we need more and more voices saying, 'We need NAFTA, we can't step away."'

Other prominent Canadian conservatives have publicly aligned themselves with Trudeau Liberals in a bipartisan effort to preserve Canada's open trading relationship with the United States.

They include Rona Ambrose, the former interim Conservative leader, and former Progressive Conservative prime minister Brian Mulroney, who gave an unprecedented briefing to Trudeau's cabinet on Trump, who is a friend.

https://www.washingtonpost.com/business/mexico-readies-for-worst-as-4th-round-of-nafta-talks-open/2017/10/11/d1dab888-ae9d-11e7-9b93-b97043e57a22_story.html?utm_term=.dc13e40fa35b <https://www.washingtonpost.com/business/mexico-readies-for-worst-as-4th-round-of-nafta-talks-open/2017/10/11/d1dab888-ae9d-11e7-9b93-b97043e57a22_story.html?utm_term=.dc13e40fa35b>

Mexico readies for worst as 4th round of NAFTA talks open

 <>By Mark Stevenson | AP October 11 at 3:32 PM
MEXICO CITY — Mexico appeared to be preparing for the worst as the fourth round of talks on the North American Free Trade Agreement were opening in Washington on Wednesday.

Mexico’s foreign relations secretary, Luis Videgaray, said Tuesday his country won’t accept “limited, managed trade,” an apparent reference to demands for higher U.S. and regional content rules on products like auto parts.

“We have to be prepared to say no, and if necessary to get up from the table and if necessary leave the treaty,” Videgaray said, adding, “It would not be the end of the world.”

Videgaray said leaving NAFTA would increase tariffs by an average of about 3.5 percent for the 44 percent of Mexican exports that use NAFTA trade preferences. He said tariffs would increase by more — around 7 percent — for U.S. businesses exporting to Mexico.

“An abrupt exit from NAFTA would be more of a loss for U.S. exporters than for Mexican ones,” he said.

Thomas J. Donohue, President of the U.S. Chamber of Commerce, appeared to share the sense of threat, saying “We’ve reached a critical moment, and the Chamber has had no choice but to ring the alarm bells.”

“The U.S. business community will stand up for an important agreement that makes North America stronger and more prosperous,” Donohue said at a speech in Mexico City on Tuesday.

Alfredo Coutino, Latin America director at Moody’s Analytics, wrote in a report that the probability of a breakup of the 1994 trade agreement has increased.

“U.S. negotiators have made conditions so tough that Mexico and Canada could reject them, which would be the perfect excuse for the U.S. government to announce its departure from NAFTA,” Coutino wrote. “Among conditions demanded by the U.S. are a significant increase in regional content — particularly U.S. content — in the region’s exports, a uniform upper limit for government purchases, some restrictions to agriculture products coming to the U.S. from Mexico and Canada, and the elimination of the chapter on resolution of controversies.”

The big question for the United States would be whether Mexico would continue to cooperate on security and migration issues if NAFTA is dissolved. Mexico currently catches and returns many Central American immigrants who enter the country seeking to reach the United States. And Mexico has closely cooperated with U.S. law enforcement agencies fighting drug cartels in Mexico.

In an interview with local media this week, Economy Secretary Ildefonso Guajardo said Mexico would cut back.

“Clearly, Mexico’s willingness to collaborate would not be as enthusiastic if you are mistreated on one front,” Guajardo said. “There would no doubt be the necessary cooperation for our own interests, but there wouldn’t be any volunteering of support for things that go beyond what our own national security requires.”

INSIDE US TRADE

Fourth NAFTA round extended by two days; ministers to meet, deliver statements Tuesday

October 10, 2017 
The fourth round of NAFTA talks, originally slated for Oct. 11-15 in Arlington, VA, has been extended by two days, according to a schedule of the round obtained by Inside U.S. Trade -- with ministers from the three countries slated to hold bilateral and trilateral meetings on Tuesday, Oct. 17.

The ministers decided to delay their meetings and the official end of the round because of scheduling conflicts, sources said.

Negotiators from the U.S., Canada and Mexico will begin the round on Wednesday by delving into 10 different subject areas, including government procurement and textiles, which have proven to be controversial in previous rounds. A single textiles session has been scheduled, while government procurement discussions are slated to continue into Thursday.

The fourth round of talks -- like the past three -- will not include a session on currency, even though the Office of the U.S. Trade Representative highlighted it as one of its negotiating objectives, and USTR Robert Lighthizer, at the first round in August, said a new NAFTA “should have effective provisions to guard against currency manipulation.”

Sources said the Trump administration has discussed a currency proposal with congressional staff members and might have even floated text, but these sources said it was unclear whether any such text had won the approval of the Treasury Department and cleared the interagency process. Treasury traditionally has opposed the inclusion of currency language in trade agreements, and sources have told Inside U.S. Trade that Treasury Secretary Steven Mnuchin has warned Lighthizer that language on currency must not bind U.S. monetary policy <https://insidetrade.com/node/160409>.

Negotiators will discuss investment -- and a controversial opt-in proposal for the agreement’s investor-state dispute settlement mechanism the U.S. will put forward -- beginning on Saturday, in talks set to last through Monday, the schedule shows. ISDS opponents on Capitol Hill will hold a rally Wednesday urging the administration to drop the dispute settlement mechanism altogether.

Rules of origin will be discussed on Friday and then again on Sunday and Monday. Sources told Inside U.S. Trade last week that USTR will table a proposal for auto rules of origin <https://insidetrade.com/node/160551> that included a 50 percent domestic content requirement and an increased regional value content requirement of 85 percent.

At the end of the third round of talks in Ottawa last month, the trade ministers from the three countries announced the completion of one chapter -- on small and medium-sized enterprises -- and touted “meaningful advances <https://insidetrade.com/node/160415>” in areas like telecommunications, competition policy, digital trade, good regulatory practices and customs and trade facilitation.

According to the schedule for round four, regulatory practices will be negotiated Wednesday and Thursday. Telecommunications are set to be discussed Thursday and Friday. Customs issues are on the schedule for Friday and Saturday; digital trade will be addressed Saturday and Sunday.

Competition policy is not listed as one of the topics of discussion. A joint statement issued at the end of the third round said the three sides “advanced substantively” in that area and expected to “conclude the negotiation on this chapter prior to the next round.”

Agriculture -- a topic of great concern to many in Congress, as well as to an industry that overwhelmingly hopes to preserve its market access -- will be discussed on Saturday and Sunday, with the deal’s agricultural annex set for a session on Thursday.

In remarks at the end of the third round, Lighthizer said “significant progress” had been made on sanitary and phytosanitary measures and state-owned enterprises. Three days of discussions -- Wednesday through Friday -- are set for the former, while the latter is scheduled to be addressed on Wednesday and Thursday.

Sources have speculated the administration’s approach to the talks and its proposals put forward so far -- as well as those it intends to table at the round this week -- could make a U.S. withdrawal from the agreement more likely <https://insidetrade.com/node/160563> due to opposition from Canada and Mexico, the business community and some in Congress.

President Trump, in an interview with Forbes this week, reiterated his view that “NAFTA will have to be terminated if we're going to make it good <https://insidetrade.com/node/160566>.” -- Jenny Leonard (jleonard at iwpnews.com <mailto:jleonard at iwpnews.com>)

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