SLOW DOWN, trade experts warn
American officials from the president on down have issued the warning repeatedly in recent days: Canada must agree to a revamped NAFTA deal by Friday or miss out on a crucial window of opportunity.
And if that happens, this country could face devastating U.S. tariffs on auto exports, the White House insists.
But outside experts say the American law governing how Congress approves trade deals — the oft-cited reason for the time crunch — permits much more flexibility. Talks with Canadian negotiators could actually continue into late September, while still enabling Mexico’s outgoing president to sign the accord before Dec. 1, considered a crucial objective, they say.
“I would be surprised if it was wrapped up this week,” said Gary Hufbauer, a former U.S. government trade official and fellow at Washington’s Peterson Institute for International Economics. "This Friday business is just Trump bullying, which he likes to do.”
Canada would still have to consent on Friday to the White House issuing Congress a notice of an impending agreement but could then keep negotiating details of the deal, echoed Dan Ujczo, a trade lawyer who has followed the process closely.
“The goal is to make the clock their friend,” he said. “Unless this deal is patently unfavourable to Canada, it is a no-brainer to consent to the notice on Friday, and continue to negotiate through September.”
Neither the office of Foreign Affairs Minister Chrystia Freeland, nor the U.S. Trade Representative’s office responded to requests for comment on the timing issue.
The U.S. announced a sweeping overhaul of NAFTA Monday after five weeks of talks with Mexico that excluded Canada, then invited the Canadians to discussions they said would have to conclude on Friday.
The goal is to have the new deal signed by outgoing Mexican President Enrique Pena Nieto before his recently elected successor, Andres Manuel Lopez Obrador, takes office Dec. 1. Nieto would gain a legacy achievement, Lopez Obrador the ability to blame any shortcomings in it on the previous regime.
The U.S. Trade Promotion Authority (TPA) requires the White House to give Congress 90 days’ notice that it plans to sign a trade deal. On its own, that would make Saturday the deadline for concluding things. The White House has said it would give notice Friday.
But the TPA also says the final text of the deal doesn’t have to be released until 60 days before signing.
That means Canada could have as much as another 30 days to hammer out its part in the agreement, trade experts say.
Hufbauer, a former deputy assistant secretary for international trade, goes further, saying the timing requirements set down in the TPA could effectively be waived by the Senate and House of Representatives if they wanted to allow negotiations more time. Congress has done so repeatedly over the years, he said.
Chris Sands, head of the Center for Canadian Studies at Johns Hopkins University, agreed the TPA’s rules could allow more time to negotiate, but argued Canada would have to make a more significant gesture by the end of this week.
“That means agreement on all substantive points and commitments,” he said. ”The text could shift, but not the core of concessions and undertakings.”
A veteran Washington trade lawyer, who asked not to be named, said the U.S. administration and the Mexican government would both have to agree to let talks continue into September — and still meet the Dec. 1 Mexican target.
Regardless, the Canadians likely want to avoid being forced into accepting a crucially important agreement in three days, for political reasons at least, said Hufbauer. Freeland said substantive discussions on the issues started Wednesday.
“If it was wrapped up this week, it would look humiliating to the Trudeau government,” he said.
In fact, one source who is regularly briefed on the talks said U.S. negotiators seem unwilling to horse trade with their Canadian counterparts, while eager to win concessions on access to Canada’s protected dairy market.
“I heard the word multiple times: ‘Canada is coming down here to get embarrassed,’ ” the person said. “‘If Canada thinks it was coming down for negotiation, it was mistaken.’ ”
Freeland emerged from trade talks Wednesday to say negotiators are “grinding through extremely intensively,” but refused to divulge what Canada is putting on the table.
Prime Minister Justin Trudeau, at an event in northern Ontario, said an agreement by Friday is a possibility but not at the cost of a good deal for Canadians.
His office said he would hold a call Thursday afternoon with premiers to discuss the negotiations.