Tariff threat tormenting NAFTA talks

One number posing big problems

Despite the eyepopping figures thrown around in the NAFTA conversation — $2 billion in daily trade, 18 million autos built each year, hundreds of thousands of jobs in the U.S. — one number in particular seems to be giving fits to Canada’s negotiating team: 232.

That’s the section of U.S. trade law that lets President Donald Trump use national security as justification to impose crippling tariffs on foreign imports, a sword of Damocles the federal Liberal government desperately wants to blunt.

Sources say Thursday’s talks between Foreign Affairs Minister Chrystia Freeland and U.S. trade ambassador Robert Lighthizer were dominated by efforts to secure a commitment from the Americans that a new NAFTA deal would mitigate the risk of such tariffs.

“232 is emerging as the major problem,” said one source close to the talks, speaking freely on condition of anonymity.

Rather than demanding absolute immunity, Canada is working hard to try to make the president’s favourite trade cudgel “more difficult to reach for,” the source said.

For her part, Freeland offered little evidence of momentum Thursday when she emerged from the talks, sticking to her strategy of keeping mum on substantive details and offering only that the two sides were focused on “some tough issues.”

“The atmosphere continues to be constructive, and we continue to work towards a deal, which has always been Canada’s objective,” Freeland said.

“Canada has, from the very beginning, been guided by a single metric, and we continue to be guided by that single metric, and that metric is getting a deal that is good for Canada and good for Canadians. That is our target.”

Talks, as well as the ensuing public narrative, have been dominated by some familiar stumbling blocks, including the dispute-resolution mechanism known as Chapter 19, stronger protection for Canadian workers and more U.S. access to Canada’s dairy market, among others.

There have been signs of progress, including word Wednesday that the U.S. had backed off in recent weeks on its desire to limit Canadian and Mexican firms from bidding on lucrative American procurement projects. Talk of all-night marathon negotiating sessions is also seen as a good sign.

But as some of the more fundamental differences fall away, Sec. 232 has indeed emerged as a major issue, trade watchers say.