Nafta renegotiation talks begin amid high expectations
NEGOTIATORS from Canada, Mexico and the United States were set to open the first round of talks yesterday to revamp the 23-year-old regional free trade agreement some see as a demon and others as a saviour.
Between those extremes, there are high expectations but different views on how to remake the North American Free Trade Agreement into a deal that pleases all sides, and fulfills President Donald Trump’s repeated campaign promises to help US workers.
Trump famously denounced Nafta as “the worst trade deal maybe ever signed anywhere,” and promised to pull out of the agreement he said has destroyed US jobs, but succumbed to pressure to renegotiate instead.
Given criticism over his handling of North Korea, Venezuela and the white supremacist violence in Charlottesville, Virginia, Trump will need to have something he can call a victory out of the talks.
However, he recently warned again that he will “terminate Nafta” if “we don’t get the deal we want”.
While some view statements like this from Trump as bombast, Fred Bergsten, director emeritus of the Peterson Institute for International Economics, warned, “Failure is an option.”
“We don’t like to say that, we don’t like to think about it, but it’s true,” he said, warning of serious consequences to the US economy.
Even with that threat hanging over the talks, negotiators are going into the first of several rounds of negotiations optimistic about updating the pact that was signed before the internet was a force, and covers a market of nearly 500 million people.
Large negotiating teams from Canada, Mexico and the United States will meet through Sunday to develop the new text of the pact. They are due to reconvene September 5 in Mexico City.
The timeline for the talks is expected to be aggressive, given elections in Mexico in July 2018, as well as the US legislative calendar.
A USTR official confirmed plans to add a chapter on digital trade, as well as incorporating side agreements added after the fact on environmental and labour standards.
Canada also has stressed the need for stronger labor and environmental rules in the agreement.
Another likely source of dispute is Washington’s desire to eliminate an infrequently used dispute resolution process under which a Nafta panel can overrule individual countries’ decisions on dumping and unfair subsidies.
Washington views Chapter 19 as unfair, since it can overrule decisions made by US agencies on imports thought to receive unfair subsidies.
But for Canada especially, which has successfully used the process in the longstanding timber dispute with the United States, Chapter 19 is not negotiable.