A SPLIT IN NAFTA NEGOTIATIONS?
Experts anticipate sets of bilateral deals with leveraging
WASHINGTON, D.C. • The on-again, off-again NAFTA talks appear headed in a whole new direction, one that could see the United States strike a quick deal with Mexico first, then turn to Canada with potentially added leverage, experts suggested Friday.
The scenario might even result in the States sparing Mexico further punitive tariffs on steel or possibly cars, as Canada remains in the vice, said one analyst, citing sources in the administration and on Capitol Hill.
“We are looking at a possible scenario that at some point in midor late-August, the U.S. announces automotive tariffs and exempts Mexico, but not Canada,” said Dan Ujczo, a trade lawyer and expert on Canada U.S. relations.
“That could be a significant challenge politically,” he added.
“The trillion-dollar question is: Does Canada continue to rally around the prime minister at that point, or do we really start seeing the private sector push to take a deal (with concessions)?”
On the other hand, Canada could benefit from a two-stream approach, as its interests and economic conditions are much closer to those of the U.S. than Mexico, said Chris Sands, head of the Center for Canadian Studies at Johns Hopkins University.
The comments came after a flurry of developments this week pointing to a possible split in the negotiations.
President Donald Trump suggested a separate deal with Mexico was near after the U.S. had a good session with its officials, while one with Canada might come “later;” close aides also talked of progress with Mexico; and the Mexican economics minister made plans to meet the chief U.S. trade negotiator in Washington, next week — a session that would not include Canada.
Prime Minister Justin Trudeau said Friday a trilateral approach was still the best path for increasing prosperity in the region.
“That’s why we’re committed to renegotiating and improving and updating NAFTA,” he told reporters in Markham, Ont.
Kirsten Hillman, Canada’s deputy ambassador to Washington, suggested in an interview earlier this week that three-way talks would get going as soon as Mexico was prepared after its recent election.
“We are ready, willing and able to get going as soon as possible,” she said.
Two sets of bilateral talks may yet result in a single, updated North American Free Trade Agreement, said Ujczo, but trilateral negotiations are unlikely to occur any time soon.
A split in talks may not be inevitable, but is more likely than not, echoed Sands.
Both analysts attribute that shift mainly to the opportunity presented by the long transition to power of Mexico’s newly elected president, Andrés Manuel López Obrador.
There is motivation for outgoing president Enrique Peña Nieto to strike a deal, and Obrador has said he would respect it when he takes office in December. The leftist Obrador might also push for his own accord, meaning the U.S. could play both politicians off each other, said Sands.
But Canada’s approach has also contributed to the U.S. making Mexico a priority, he said.
Robert Lighthizer, the U.S. Trade Representative, is known to be angry at Canada for failing to present creative proposals, not backing him on pushing for higher wages in Mexico and broadly challenging the States at the World Trade Organization, the Johns Hopkins professor said.
“The tip of an iceberg really because Lighthizer has a long list of beefs with the Trudeau government on trade,” said Sands. “Both Trump and Lighthizer reacted badly to Trudeau and (Foreign Minister Chrystia) Freeland lecturing them about the virtues of free trade while insisting on protection of dairy supply management.”
Such irritation is likely part of the reason the negotiations seem to be splitting, agreed Ujczo.
“We hear frustration from U.S. officials that Canada was dragging its feet in the negotiations,” he said. “That’s at least the U.S. perspective, whereas Canada would say, ‘We were negotiating in good faith, to try to get a win-win situation.’”
(ONE POSSIBLE SCENARIO IS) THE U.S. ANNOUNCES AUTOMOTIVE TARIFFS AND EXEMPTS MEXICO, BUT NOT CANADA.