The art of not get­ting a deal

Trump tac­tics seen by some as way to kill NAFTA


OT­TAWA — Call it the art of the non-deal.

As the fourth round of talks in the North Amer­i­can Free Trade Agree­ment rene­go­ti­a­tion be­gins this week near Wash­ing­ton, a con­sen­sus is grow­ing that a se­ries of un­ten­able U.S. bar­gain­ing po­si­tions is part of sim­ple plan by U.S. Pres­i­dent Don­ald Trump to lay the ground­work so he can walk away from the con­ti­nen­tal trade pact to please his do­mes­tic base.

Some cite a Buy Amer­i­can pro­posal that would limit Cana­dian and Mex­i­can ac­cess to U.S. pro­cure­ment projects pre­sented in the third round of talks in Ot­tawa two weeks ago.

But more clangers could drop in this up­com­ing round when the U.S. might wade into another area con­tentious area: Its de­sire for more ac­cess to Canada’s pro­tected and sup­ply man­aged dairy in­dus­try.

“I’m be­com­ing more and more of the view that the pro­pos­als we’re see­ing are poi­son pills,” said Dan Ujczo, an Ohio-based in­ter­na­tional trade lawyer with the firm Dick­in­son Wright.

“Th­ese are pro­pos­als that nei­ther Canada nor Mex­ico can ac­cept.”

Ujczo and oth­ers say the Buy Amer­i­can pro­posal was prime ex­am­ple. Sim­ply put, the U.S. wanted to limit the Mex­i­can and Cana­dian abil­ity to bid on U.S. pro­cure­ment con­tracts, while seek­ing greater ac­cess for Amer­i­cans firms to Mex­i­can and Cana­dian govern­ment projects.

That stick­ing point comes with other hard is­sues still on the hori­zon, in­clud­ing dairy, auto parts, the dis­pute res­o­lu­tion sys­tem and the U.S. push for a re­view of NAFTA ev­ery five years.

“It’s go­ing nowhere fast. It’s clear. The U.S. has some ridicu­lous pro­pos­als on the table,” said Jerry Dias, the head of the Cana­dian union Uni­for.

“You only put those types of pro­pos­als on the table if you’re not look­ing re­ally to find a deal.”

For­eign Af­fairs Min­is­ter Chrys­tia Free­land ad­dressed the Buy Amer­i­can is­sue in Ot­tawa on the last day of talks two weeks ago, say­ing the re­cently-com­pleted Canada-EU free trade deal, which opened up lo­cal pro­cure­ment to both sides, was Canada’s pre­ferred op­tion.

“We would like to en­cour­age our im­me­di­ate neigh­bours to meet the levels of am­bi­tion we have been able to achieve with our part­ners across the At­lantic.”

Peter Clark, an Ot­tawabased in­ter­na­tional trade strate­gist who was in­volved in the original NAFTA and Canada-U.S. free trade ne­go­ti­a­tions, said the Amer­i­can be­hav­iour is a vivid and un­prece­dented ex­am­ple of how not to ne­go­ti­ate. He called it a tac­tic de­signed to en­sure fail­ure.

“Ne­go­tia­tors try to deal in the art of the pos­si­ble,” said Clark.

“Trump doesn’t be­lieve he can get what he re­ally wants with­out tear­ing it up, or ter­mi­nat­ing it, or giv­ing us notice of ter­mi­na­tion. That’s that way he op­er­ates.”

Clark pre­dicted Canada can ex­pect plenty more of the same when Round 4 gets un­der­way.

Agri­cul­ture Sec­re­tary Sonny Per­due told a trade dis­cus­sion in Wash­ing­ton last week that the U.S. would likely make a spe­cific re­quest to Canada for more ac­cess to its dairy and poul­try markets.

The dairy sec­tor was ex­cluded from NAFTA in 1994, but the sup­ply man­age­ment sys­tem, which lim­its the amount of dairy that can be im­ported into Canada with­out high tar­iffs, has been an on­go­ing ir­ri­tant.

Trump cried foul over a sub­se­quent deal out­side of NAFTA that al­lows Cana­dian dairy pro­duc­ers to sell milk pro­teins to do­mes­tic pro­ces­sors at a dis­count to pro­tect the in­dus­try from im­ports of cheap U.S. milk in­gre­di­ents.

The Lib­eral govern­ment has re­peat­edly vowed to pro­tect sup­ply man­age­ment and its agri­cul­ture sec­tor.

Canada’s dairy in­dus­try said it has no idea whether U.S. ne­go­tia­tors will ac­tu­ally come to the next round with firm pro­pos­als.

There’s a “se­ri­ous risk” of los­ing NAFTA be­cause of Trump’s ap­proach, said Robert Zoel­lick, the for­mer World Bank pres­i­dent and ex-U.S. Trade Rep­re­sen­ta­tive un­der Ge­orge W. Bush.

Speak­ing to a NAFTA event in Wash­ing­ton this past week, Zoel­lick said Canada can’t back down on another key de­mand by Trump to abol­ish the pan­els that set­tle dis­putes. Zoel­lick re­called how hard Canada fought for the in­clu­sion of that chap­ter in the original Canada-U.S. Free Trade Agree­ment, NAFTA’s pre­cur­sor.

“The Cana­di­ans spilled blood on this to get this done,” he said. “It is a very big stretch in my mind to be­lieve that any Cana­dian govern­ment can walk away with­out a Chap­ter 19 pro­vi­sion.”


For­eign Af­fairs Min­is­ter Chrys­tia Free­land meets for a tri­lat­eral meet­ing with Mex­ico’s Sec­re­tary of Econ­omy Ilde­fonso Gua­jardo Vil­lar­real, left, and Am­bas­sador Robert E. Lighthizer, United States Trade Rep­re­sen­ta­tive, dur­ing the fi­nal day of the third round of NAFTA ne­go­ti­a­tions at Global Af­fairs Canada in Ot­tawa on Sept. 27.

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