[CTC] Trudeau, Trump governments slam each other publicly for first time as NAFTA talks go off rails

[Arthur Stamoulis]

Several interesting ones on close of NAFTA round…

https://www.thestar.com/news/world/2017/10/17/trudeau-trump-governments-slam-each-other-publicly-for-first-time-as-nafta-talks-go-off-rails.html <https://www.thestar.com/news/world/2017/10/17/trudeau-trump-governments-slam-each-other-publicly-for-first-time-as-nafta-talks-go-off-rails.html>
 
Trudeau, Trump governments slam each other publicly for first time as NAFTA talks go off rails

Foreign Affairs Minister Chrystia Freeland blasted the Trump administration’s NAFTA proposals publicly for the first time in an awkward joint press conference in Washington on Tuesday, the clearest sign yet that negotiations are strained to the breaking point.

By DANIEL DALE <https://www.thestar.com/authors.dale_daniel.html> Washington Bureau
Tues., Oct. 17, 2017
WASHINGTON—The good vibes are gone.

In the clearest public indication that talks over the North American Free Trade Agreement are going poorly, Foreign Affairs Minister Chrystia Freeland blasted the U.S. for the first time on Tuesday while U.S. Trade Representative Robert Lighthizer blasted Canada and Mexico.

They were standing beside each other at an awkward joint appearance in Washington to mark the end of the fourth round of negotiations over the U.S.-initiated effort to revamp the 23-year-old continental free trade pact.

Prime Minister Justin Trudeau and members of his government, including Freeland, had until Tuesday maintained a chipper public tone about the talks even as the mood at the bargaining table darkened.

No longer. Freeland denounced the U.S. for “an approach that seeks to undermine NAFTA rather than modernize it,” warning that the “unconventional” proposals from President Donald Trump’s administration would “turn back the clock” and put tens of thousands of jobs at risk.

Lighthizer, meanwhile, criticized both Canada and Mexico for what he called a “resistance to change,” saying he was “surprised and disappointed” they were obviously acting to defend the “unfair advantage” possessed by Canadian and Mexican companies.

The three parties announced that they would take the trade equivalent of a timeout, starting the fifth round of negotiations a month from now rather than their usual two weeks.

In a joint statement, the three countries agreed there were “significant conceptual gaps among the parties.” They said they had “called upon all negotiators to explore creative ways to bridge these gaps.”

They spoke at the end of a weeklong round at which U.S. negotiators delivered demands so unpalatable to Canada and Mexico that trade experts were left wondering if Trump, who has been publicly noncommittal, preferred to blow up the talks <https://www.thestar.com/news/world/2017/10/10/donald-trumps-outrageous-demands-put-nafta-negotiations-at-risk-of-collapse-as-talks-resume-wednesday-experts-say.html> rather than reach a new deal.

Freeland and her office previously criticized specific U.S. proposals. But this was the first time she, or any other top Canadian official, publicly expressed broad concern about the state of the talks or the American approach.

Freeland was most forceful on the subject of U.S. automotive proposals, warning that they would “put in jeopardy tens of thousands of jobs across North America.” Among other significant changes, the U.S. has proposed a new rule requiring that 50 per cent of car content be made in the United States.

“We have said this from the beginning: we will maintain and defend the elements of NAFTA that Canadians consider essential to the national interest,” she said.

Lighthizer railed against trade deficits, which economists say are inconsequential but Trump considers paramount.

“We have seen no indication that our partners are willing to make any changes that will result in a rebalancing and a reduction in these huge trade deficits,” Lighthizer said — minutes after Freeland noted that the U.S. actually has a trade surplus with Canada.

Trudeau had professed “optimism” during a visit to Washington last week <https://www.thestar.com/news/world/2017/10/10/donald-trumps-outrageous-demands-put-nafta-negotiations-at-risk-of-collapse-as-talks-resume-wednesday-experts-say.html>. He did, however, acknowledge Trump’s unpredictability, and he said repeatedly that Canada was “ready for anything.”

The current list of U.S. demands vehemently opposed by Canada includes:

• A “sunset clause” that would automatically terminate the deal <https://www.thestar.com/news/world/2017/10/12/the-trump-admin-just-introduced-a-5-year-sunset-clause-into-nafta-talks-the-poison-pill-is-loathed-by-canada-and-mexico.html> in five years if all three countries did not endorse it again at that time.

• A rule requiring all cars to be made with 50 per cent American content <https://www.thestar.com/news/canada/2017/10/13/another-trump-poison-pill-for-nafta-ottawa-slams-demand-for-50-us-content-in-cars.html> if they are to be exempted from tariffs.

• The dismantling of Canada’s protectionist supply management system <https://www.thestar.com/news/canada/2017/10/16/us-takes-aim-at-supply-management-system-for-dairy-eggs-and-poultry-in-latest-nafta-talks.html> for dairy and poultry.

• A “Buy American” procurement policy sharply limiting Canadian and Mexican access to U.S. government contracts.

• The end of the current independent tribunal system for resolving NAFTA disputes.

======

 
INSIDE US TRADE
 
Mexico tells U.S. industry it will stick with NAFTA talks, won’t hand Trump a reason to withdraw

October 17, 2017 
After the Trump administration tabled a slew of highly contentious proposals in the fourth round of NAFTA talks, Mexican officials this week made clear to the U.S. business community that Mexico intends to stay at the table for the seven scheduled negotiating rounds and won’t hand President Trump what some believe he is looking for -- a reason to begin the withdrawal process.

The Mexican officials, in a briefing with U.S. companies this week, stressed they were objecting to virtually all of the proposals put forward by the U.S., but said they were committed to the seven rounds that have been agreed to by the three countries, sources told Inside U.S. Trade.

The latest U.S. proposals have “substantially raised tensions” between the three parties, a source noted, but Mexico has made clear to both the business community and Capitol Hill that those proposals would not prompt it to walk away from the talks. According to sources who met with Mexican officials, they said the only thing that would make them walk away was a U.S. withdrawal notice.

Should Trump trigger NAFTA’s Article 2205 -- which lays out how a party can exit the agreement -- these sources said Mexico would use the six-month time frame between the notice and before the withdrawal is complete to negotiate with other countries and look to further diversify its market.

At a Council on Foreign Relations event this week, Antonio Ortiz-Mena, senior vice president of Albright Stonebridge Group and former head of economic affairs at the Mexican Embassy in the U.S., said Mexico intends to continue negotiations through seven scheduled rounds if the U.S. does not withdraw.

“Mexico will try to stick with it until the end <https://insidetrade.com/node/160646>,” Ortiz-Mena said, “as long as there is not a U.S. withdrawal notice.”

Some sources, however, said U.S. lawmakers and congressional staff members have told Mexican officials it would not be necessary for Mexico to immediately walk away from the table because the Trump administration would face sufficient pushback from Congress and the business community to prevent a withdrawal.

The fourth round of talks wrapped up in Arlington, VA, on Monday. Trade ministers today held bilateral and trilateral meetings and were set to conclude the round with a joint statement and press briefing.

Negotiations are slated to last until December, but some sources said it was becoming increasingly clear the talks would last until at least early 2018. They said Mexico has shown some openness to negotiate through March but called that a “hard deadline” for talks to wrap up given Mexico’s presidential election in early July.

While Mexico is actively considering a plan B should the U.S. withdraw, sources said Canada’s strategy, on the other hand, is to “keep calm and carry on,” as one source put it. Another source told Inside U.S. Trade the Canadian plan is to “survive this punch” and hope for talks to drag on long enough to give Congress a chance to pass a resolution of disapproval that would not extend Trade Promotion Authority for this administration.

Sources said both Mexico and Canada were asking “a lot of questions” in the negotiating sessions but added that neither had put forward many proposals of their own.

One source described the U.S. proposals as “bonkers,” while another said she expected a U.S. push for a sunset clause alone was “enough to kill the agreement” and prompt Mexico or Canada to get up and leave -- something the U.S. business community feared going into this round.

Another source said the Mexican reaction to U.S. proposals “ranged from ‘no, no’ to ‘hell no’” and added that Mexico was determined to stand its ground.

Asked about the fate of the talks, one source said “it's looking tough” because of “too many absurd proposals” by the U.S. “There is a high component of insanity here, especially in the triumvirate Trump-Lighthizer-Navarro,” the source said, referring to U.S. Trade Representative Robert Lighthizer and senior White House trade adviser Peter Navarro.

Another source agreed with that description, saying that while “it is most likely a negotiation technique -- ‘ask for lots, settle for less’ -- the USTR is most certainly overdoing it.”

A USTR official, in a briefing with the U.S. business community this week, compared the third round to the fourth and said if the Ottawa talks deserved a “B,” the fourth round should be awarded something “closer to a ‘C+.’” The official also told industry representatives he did not expect “any big breakthroughs or closures this round,” according to sources who were briefed on the status of the talks.

Another source close to the talks said the U.S. negotiators’ body language during the sessions showed that “nobody on the career level at USTR believes in what we’re putting forward.” At the same time, the sources added, the officials’ message to their Mexican and Canadian counterparts, as well as the U.S. business community, was that their “marching orders are set.”

The USTR official, in the briefing with the business community, said there had been “initial discussions” on U.S. sunset and dispute settlement proposals -- and Canada and Mexico’s response to these proposals was “about what we expected: 'This is not what we're used to, and we will really have to think about that.’"

According to the official, "no one has welcomed” the U.S. proposals, adding that “how much they don't welcome them depends on the proposal."

The official also said the U.S. was pushing harder for Canada and Mexico to increase their de minimis thresholds and that this push was met with “a fair amount of kickback” from both partners.

As for a government procurement proposal that USTR tabled at the Ottawa round, which is opposed by industries across the board, the official told attendees the Trump administration is focused on "what can be done to incentivize production in the U.S. and maximize employment, particularly in manufacturing,” Inside U.S. Trade has learned.

Jorge Guajardo, a former Mexican ambassador to China, this week recounted his meeting with several Mexican business leaders and their stance on the likelihood of a NAFTA withdrawal.

“I think Mexican businesses have moved past NAFTA, knowing it’ll be scrapped. I don’t think US business has,” Guajardo tweeted on Tuesday. “I had dinner with 3 Mexican CEOs last night, big companies, all NAFTA poster boys, they all assumed NAFTA was dead, and they were OK.”

The U.S. business community, he added, “was so convinced Mexico depended on NAFTA that it would save the treaty by caving on all demands. This was a miscalculation.”

Asked whether NAFTA was likely to be terminated, one business source said “the optimist in me likes to believe it is not, but the line separating status quo from disaster is rather thin. And who would remain in a bad agreement? It's like staying in a bad marriage.”

Against the backdrop of Mexican and Canadian pushback against the U.S. approach -- and the growing fear that withdrawal is imminent -- the business community is wrapping up round four with a plea to preserve the agreement.

“Simply put, we cannot afford for the United States to abandon free trade. A collapse of the NAFTA trade agreement between the United States and our two largest trading partners would be an economic catastrophe, with massive disruptions in agriculture and manufacturing and increased costs for American consumers,” said Hun Quach, vice president of international trade policy for the Retail Industry Leaders Association. “As retailers, we strongly urge all parties to preserve the parts of NAFTA that work for American businesses and to avoid proposals that would damage the U.S. economy and hurt American families.”

Many sources cited a debate among stakeholders and trade officials about the pros and cons of delaying the next round in an attempt to give all parties an opportunity to “take a breath” and consult with capitals and stakeholders on a path forward.

But after industry meetings with government officials from all countries, sources said a pause was unlikely. “I don’t think it’s realistic given current dynamic of Trump administration,” one said, adding that a pause could be mistaken as one of the parties abandoning the talks.

Another source, however, argued that the pace of the negotiations is “too fast for anyone to understand what’s going on” and too much for the business community and Congress to prepare for a U.S. withdrawal.

“There are tensions between the ‘timeout crowd’ and those that think a timeout is the equivalent of walking away,” the source said. “The latter fear the president will use that as an excuse to withdrawal. I think that’s wrong. In any negotiation if it gets too hot you take a timeout.”

The USTR official, in the briefing with the business community, described the pace and the goal to finish talks by December as a “mad rush.”--Jenny Leonard (jleonard at iwpnews.com <mailto:jleonard at iwpnews.com>)

=======

https://www.nytimes.com/reuters/2017/10/17/business/17reuters-trade-nafta-mexico.html <https://www.nytimes.com/reuters/2017/10/17/business/17reuters-trade-nafta-mexico.html>
 
Mexico Considers New Laws on Investor Security if NAFTA Dies: Minister
By REUTERS
OCT. 17, 2017, 4:24 P.M. E.D.T.
WASHINGTON — Mexico is examining ways to create new laws that would give investors security over their investments if the NAFTA collapses, Mexico's economy minister said on Tuesday.

Addressing reporters near Washington on the same day that the United States, Mexico and Canada agreed to extend fraught talks to update the North American Free Trade Agreement into 2018, the minister, Ildefonso Guajardo, said it was important for Mexico's negotiating position to have a fallback plan.


Arthur Stamoulis
Citizens Trade Campaign
(202) 494-8826




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