[CTC] Articles on Ottawa NAFTA round

[Arthur Stamoulis]

two articles below…

Inside US Trade
USTR to propose labor, IP text, but hold off on most controversial ideas at third NAFTA round
September 24, 2017 
 
OTTAWA -- At the third round of NAFTA renegotiation talks, the U.S. is tabling text in areas like intellectual property, government procurement, labor and investment that some have described as “unorthodox,” but holding off -- for now -- on advancing a controversial sunset clause and dispute settlement proposals, sources said.
 
The Trump administration’s plan to include a five-year sunset clause that would tie a new deal’s potential termination to the trade deficit <https://insidetrade.com/node/160385> has been met with opposition from the “big four” leaders on the congressional trade committees, sources told Inside U.S. Trade. And while lawmakers do not have a veto on text the administration can advance in the talks, sources said the bipartisan pushback from those key members has resulted in at least a delay of such a proposal.
 
The sunset proposal would be the first to date in which the administration is seeking to address the trade deficit directly -- a goal that the Office of the U.S. Trade Representative claims is its top objective for the talks.
 
Another area USTR Robert Lighthizer and his team listed as a high priority is increasing the regional value content requirement for autos and auto parts and including a domestic content requirement in the rules-of-origin text. Sources said USTR also favors the same approach for industrial goods. However, just like at the first two negotiating rounds, U.S. negotiators will not share product-specific rules of origin proposals with their Canadian and Mexican counterparts here this week, they said.
 
Canada’s chief negotiator, Steve Verheul, told Canadian news outlets on Sept. 23 that rules of origin will be “a subject for discussion <http://www.cbc.ca/news/politics/nafta-ottawa-auto-content-1.4304277> but we're not expecting to see anything radically new at this point.”
 
The longer such core issues are kept off the table, the less likely it is that talks will wrap up before the end of the year, sources said, citing a lack of incentive for Canada and Mexico to meaningfully engage before they are presented with all U.S. demands.
 
Lighthizer last week voiced skepticism that negotiations could conclude by year’s end. “We’re moving at warp speed but we don’t know whether we’re going to get to a conclusion; that’s the problem,” he said on Sept. 18. “We’re running very quickly somewhere.”
 
Still, sources expect the third round of NAFTA talks to reveal which issues will be toughest to negotiate, with the U.S. staking out controversial positions and tabling text on a number of chapters, sources said.
 
According to a schedule of the round obtained by Inside U.S. Trade, negotiators will delve into rules of origin on Monday, Tuesday and Wednesday. The only other issue that will get three days of attention at this round is the environment; talks in that area began on Saturday and are scheduled to continue through Monday.
 
Negotiators began the round by discussing customs, sanitary and phytosanitary issues, cross-border trade in services, government procurement, digital trade and financial services.
U.S. chief negotiator John Melle told reporters at the second round in Mexico City that the three countries had made “great progress <https://insidetrade.com/node/160154>” on the digital trade chapter, as well as on services and the environment.
 
As was the case with the schedules for rounds one and two, the more contentious issues are set to be addressed toward the end of the session. At the Ottawa meeting, negotiators will tackle trade remedies, investment, intellectual property and rules of origin over the last days of the round.
 
Some sources have faulted that approach, claiming that leaving the most controversial areas for the last days of the round provides insufficient time for trade ministers to be fully briefed on all developments before traditional late-round bilateral and trilateral meetings are held. That also delays the debriefing schedule for the congressional committees of jurisdiction and cleared advisers, sources added, because they cannot be briefed on those issues until after the round has been concluded.
 
Lighthizer will travel to Ottawa on Tuesday and will participate in a joint press conference with Mexican Economy Secretary Ildefonso Guajardo and Canadian Foreign Affairs Minister Chrystia Freeland to close out the round, announce any progress made and share details on the next meeting.
 
Absent from the schedule is currency, which the U.S. has said it is seeking to address “through an appropriate mechanism.” One source told Inside U.S. Trade that Lighthizer and his team are looking to include language that would make currency misalignment a countervailable subsidy.
 
But sources said USTR is still in a heated debate with the Treasury Department over how to handle the issue. Accordingly, due to Treasury’s historic opposition to including currency language in trade agreements, they do not expect the matter to be resolved in the near future.
 
USTR will also table text on IP that favors the film industry, particularly in the area of safe harbor liability rules for online service providers and fair use, sources added. The proposal has led some sources to question its compatibility with U.S. law and with Trade Promotion Authority negotiating objectives.
 
Labor text has made its way through the U.S. interagency review process and is ready to be tabled as well, sources said. Those who claim the nascent U.S. proposal is “unorthodox” noted Lighthizer’s commitment, as a Republican, to listen to demands made by Democrats and unions.
 
As an example, these sources cited the USTR negotiating objective, unveiled in July, to “ensure that these labor obligations are subject to the same dispute settlement mechanism that applies to other enforceable obligations of the Agreement.”
 
Negotiations on investment will take place Tuesday and Wednesday, the schedule shows. Sources said it was unclear whether the U.S. would put forward text for investor-state dispute settlement.
 
On Sept. 22, representatives from seven trade associations, including the National Association of Manufacturers and American Petroleum Institute, blasted U.S. proposals for an opt-in approach to ISDS <https://insidetrade.com/node/159969> as well as any type of sunset clause, warning that their support for a new NAFTA could be jeopardized should those be included.
 
On textiles, the U.S. could table text that would eliminate tariff preference levels and might introduce a short supply list mechanism in its place, sources said. The fashion and retail industries in all three NAFTA countries have voiced opposition to that idea, while the textile industry has long called for the elimination of tariff preference levels <https://insidetrade.com/node/160335>.
 
The TPL provision allows products in the NAFTA region that include certain yarns, fibers and textiles from outside the NAFTA region to be counted as originating, despite the yarn-forward rule of origin not being met, as long as a significant transformation of the imported TPL product occurs in the NAFTA region.
 
Some sources have said Canada is slow-walking the talks by not engaging in earnest at the negotiating table, but other sources have noted that the U.S. team in some instances has not been prepared to fully commit to certain positions, making progress difficult.
 
Sources said they did not expect negotiators to close out any chapters at the Ottawa round because, they argued, it would be counterproductive for any one country to agree to all parts of a chapter before seeing the entire list of another country’s demands. -- Jack Caporal (jcaporal at iwpnews.com <mailto:jcaporal at iwpnews.com>) and Jenny Leonard (jleonard at iwpnews.com <mailto:jleonard at iwpnews.com>)



http://www.reuters.com/article/us-trade-nafta/u-s-to-partially-unveil-key-nafta-proposal-talks-seen-dragging-idUSKCN1BZ0WD <http://www.reuters.com/article/us-trade-nafta/u-s-to-partially-unveil-key-nafta-proposal-talks-seen-dragging-idUSKCN1BZ0WD>

U.S. to partially unveil key NAFTA proposal, talks seen dragging

OTTAWA (Reuters) - U.S. trade negotiators will only partially unveil new text on modifying a key chapter on investment under NAFTA, two well-placed sources said on Sunday, underlying the cautious pace of talks that are supposed to wrap up by the end of the year.
The sources, with knowledge of the effort to modernize the trilateral North American Free Trade Agreement (NAFTA), said the proposal on investment would not elaborate on possible changes being weighed by Washington under Chapter 11 of NAFTA.
U.S. officials, speaking on condition of anonymity, said the administration was still consulting with stakeholders, including business, on the issue.
Trade experts say the sluggish tempo of the talks mean it is doubtful whether Canada, Mexico and the United States -- meeting in Ottawa for the third of seven planned rounds -- can come to a deal by the end of December.
Chief Canadian negotiator Steve Verheul said he did not expect the U.S. side to present detailed proposals in Ottawa on major issues such as dispute settlement, the dairy sector and tougher rules for North American content on autos.

“We’re making good solid progress ... but the end game is always the hardest part and impossible to predict,” he told reporters toward the end of the day.
U.S. President Donald Trump, who frequently describes the 1994 treaty as a disaster, is threatening to walk away unless major changes are made.
Verheul told reporters the talks were constructive, although they had occasionally “become a little more heated”. He said had seen no sign so far that the U.S. delegation might be preparing to leave the talks.
NAFTA underpins more than $1 trillion in trade between the three countries a year, accounting for 39 percent of Canada’s GDP and 40 percent of Mexico‘s, but just 5 percent in the case of the United States, the world’s largest economy.
NAFTA’s Chapter 11 allows an investor from a member country to sue a member government on the basis that it was not treated fairly.
While corporations want the administration to keep Chapter 11 -- the investor state dispute settlement -- in NAFTA, some U.S. lawmakers argue that it infringes on sovereignty by allowing foreign investors to sue the U.S. government over laws that are valid.
Canada is proposing a similar arrangement to the one it has in its free trade deal with the European Union, a senior Canadian source said. Canada and the EU have agreed to set up a permanent investment court to settle disputes.
U.S. Trade Representative Robert Lighthizer told a U.S. Senate committee he was “troubled” by Chapter 11 but pushed back at suggestions that it should be abolished.
The sources said that when the U.S. team unveiled its proposal later in the round, it would focus on eliminating barriers to investment in all sectors in the NAFTA countries, but not weigh into possible changes to Chapter 11.
The three member nations want to seal a deal before Mexico’s presidential election campaign kicks into high gear early next year.
Canadian officials said on Sunday there had been advances in less heated subjects such as the environment and small and medium-size enterprises.
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://lists.citizenstrade.org/pipermail/ctcfield-citizenstrade.org/attachments/20170925/43693493/attachment.htm>