[CTC] US is getting 'very, very close' to moving ahead on a trade deal without Canada, Hassett says

[Arthur Stamoulis]

Two articles below…

https://www.cnbc.com/2018/09/21/hassett-us-getting-very-very-close-to-trade-deal-without-canada.html <https://www.cnbc.com/2018/09/21/hassett-us-getting-very-very-close-to-trade-deal-without-canada.html>

US is getting 'very, very close' to moving ahead on  a trade deal without Canada, Hassett says

By Jeff Cox
09/21/2018

The U.S. and Mexico are prepared to move ahead alone on a new trade agreement, and Canada may get left behind, a top White House official said Friday.
Kevin Hassett, chairman of the Council of Economic Advisers, told Fox News that the revised NAFTA agreement could end up being a bilateral rather than trilateral agreement if Canada doesn't come around soon.

"We're still talking to Canada. We're getting very, very close to the deadline where we're going to have to move ahead with Mexico all by themselves," Hassett said. "I'm a little surprised that the Canadians haven't signed up yet. They've got a really, really good deal that they should be participating in."

The deadline for Canada to come on board is likely Sept. 30, Hassett said at a Yahoo Finance conference Thursday in New York.

The pact between the U.S. and Mexico, agreed to in late August, contains significant provisions on measures including intellectual property theft and trade secrets.

Negotiations with Canada, though, have been trickier, with disputes over agriculture and dairy products believed to be unresolved. The new NAFTA could be a template for negotiations with China, which remains the key sticking point in the White House's desire to revamp global trade agreements.

Hassett said the U.S. has made a fair offer to Canada and is awaiting a response.

"I worry that politics in Canada is trumping common sense, because there's a very good deal that was designed by Mexico and the U.S. to appeal to Canada and they're not signing up, and it's got everybody over here a little bit puzzled," he said. "Hopefully at the last minute they come in, but if they don't we'll just move ahead with Mexico and we'll get Canada fixed a little bit later."

This was not the first time the White House has said it is prepared to move ahead without Canada — Treasury Secretary Steven Mnuchin told CNBC in late August <https://www.cnbc.com/2018/08/28/mnuchin-hopeful-a-deal-with-canada-will-get-done-but-prepared-to-move-forward-with-mexico.html> that it was a possibility.

But Hassett's remarks still seemed to take a slight bit of steam out of what appears to be another positive day on Wall Street. Major averages were mixed.

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https://business.financialpost.com/news/u-s-mexico-drafting-final-text-of-two-way-trade-deal-but-canada-may-wait-until-after-quebec-election-on-oct-1 <https://business.financialpost.com/news/u-s-mexico-drafting-final-text-of-two-way-trade-deal-but-canada-may-wait-until-after-quebec-election-on-oct-1>

Canada may hold off until after Quebec election as U.S.-Mexico drafting two-way trade deal

By Tom Blackwell
09/20/2018

As high-intensity trade talks ended in Washington Thursday without a breakthrough, speculation mounted that Canada will wait until after Quebec’s Oct. 1 election to strike a deal, hoping to lessen the political fallout from potential concessions around the dairy industry.

The word throughout the U.S. administration and Congress is that Canadian trade negotiators are reluctant to make deep dairy compromises – if American negotiators continue to demand them – until later next month, said Dan Ujczo, a trade lawyer closely monitoring the discussions.

“If we move past today without any significant progress, I think we’re looking at a post-Quebec election scenario,” he said. “If I’m a Canadian negotiator, why would I make significant concessions days before the Quebec election? It doesn’t make sense.”

Meetings between Foreign Affairs Minister Chrystia Freeland and U.S. Trade Representative Robert Lighthizer wrapped up Thursday without a deal between the two countries. They have been immersed in pressure-filled talks since Mexico and the States announced a bilateral agreement last month.

Freeland was expected back in Ottawa Friday, meaning the ministerial-level discussions would resume next week at the earliest.

A NAFTA agreement then would come on the eve of voting in Quebec, where much of the milk industry is based and major concessions on U.S. access to the dairy market could turn into a volatile election issue. The latest poll shows the governing Liberals creeping ahead of the CAQ in a tightly-fought race.

Meanwhile, a U.S.-Mexican team is actively drafting a text of their bilateral trade deal that can be released in 10 days to meet American legal requirements.
The two-country text will incorporate placeholders allowing Canada to be slotted in if it agrees to join the accord by the deadline, said sources briefed on the process.

But it appears increasingly possible that Canada’s talks will continue up to and possibly beyond the end of the month, with key sticking points including the Chapter 19 dispute-resolution system.

To realize the goal of having Mexico’s outgoing president sign a revamped NAFTA before he leaves office Dec. 1, U.S. law says a text of the accord must be released 60 days earlier – by Oct. 1.

Mexican trade officials, who shook hands on a sweeping bilateral pact with the U.S. in August, returned to Washington last week, and with their American counterparts have been turning their handshake agreement into a detailed text.

“We are currently working on the legal review of those texts,” said a Mexican official Thursday, asking not to be named. “Little or no change is expected as a result of the negotiation between the U.S. and Canada.”

While it’s still hoped Canada will be in the text made public at month’s end, indications are that one with just Mexico will definitely be completed, said Chris Sands, head of the Center for Canadian Studies at Johns Hopkins University.

Added Ujczo: “The U.S. will go full steam ahead with the U.S.-Mexico deal, no question about it. The text will be ready.”

Nothing prevents Canada from being added into the agreement after Oct. 1, but prolonging the process does carry risks. The steel and aluminum tariffs imposed by the U.S. would likely remain in place, along with the threat of devastating automobile levies. And it’s possible the U.S. could give notice it was pulling out of NAFTA at the same time it released wording of the Mexico deal,  said Sands.

What’s more, as the American trade war with China heats up, attention to the Canadian question by the White House and Congress may well wane, he said.

The Mexico-U.S. agreement includes some contentious elements, like extending patent protection for certain drugs and raising the value of goods that individuals can import duty free, but analysts say Canada is likely to endorse those provisions by next week.

That leaves a few, hard-fought bilateral issues between the States and Canada, including the dairy question and the U.S. demand to kill Chapter 19, the NAFTA system for resolving disputes over anti-dumping and anti-subsidy duties.

“My understanding is the U.S. has not moved off any of its demands,” said Ujczo. “Canada has been negotiating in good faith and putting creative solutions on the table, but the U.S. has yet to bite.”

The U.S. will go full steam ahead with the U.S.-Mexico deal, no question about it

He said Lighthizer and colleagues are “infuriated” by what they see as the hypocrisy of Canada defending dairy supply management while preaching the virtues of free trade.

Sources say Canada has offered some additional access to the dairy market beyond the quota that now allows the U.S. to export about $500 million in milk products duty free to Canada yearly.

It’s unclear if that offer is enough, but a greater sticking point may be Chapter 19 dispute resolution.

Canadian negotiators see preserving the NAFTA trade panels partly as a matter of principle, an emblem of the rules-based international trading system which Freeland is set to champion at a meeting of the World Trade Organization in Ottawa next month.

It’s a similar matter of principle for Lighthizer, who has long criticized such international bodies as undermining American autonomy.

“What’s at stake here now with chapter 19 is essentially national sovereignty versus international norms,” said Washington-based consultant and trade expert Eric Miller. “So it’s a question of who’s going to blink first.”


Arthur Stamoulis
Citizens Trade Campaign
(202) 494-8826




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