Trump administration’s goals for new NAFTA pact point to tough negotiations ahead

Trump administration wants Canada to increase online duty-free limit by 4,000 per cent

The Trump administration has released its broad goals for a new North American Free Trade Agreement in mostly vague language that offers just enough specific clues to point to potentially tough negotiations ahead.

The U.S. says it wants more exports of its dairy products, wine and grains; freer trade in telecommunications and online purchases; new rules on currency manipulation; an overhaul of the dispute-settlement system; and more access for U.S. banks abroad.

A Washington-based trade expert who advises the Canadian government didn’t flinch when asked what this means for NAFTA talks, which are scheduled to start next month: “Longer, rather than shorter,” said Eric Miller, a consultant at Rideau Potomac who advises Industry Canada.

“It will be pretty intense and hard-fought . ... Don’t expect it to be finished in less than eight months,” Miller said. “And expect Canada to have to fight hard for issues it cares about.”

Some of the issues might be hotly debated, even between Canadians themselves. For example, the demand on online purchases could pit bargain-hunting Canadian consumers against bricks-and-mortar shops. The U.S. wants to increase the amount Canadians can buy online without paying an import tax, by 4,000 per cent.

Canada has one of the world’s most punitive duty systems for online shoppers. It will be urged to increase its duty-free limit to $800 from its current $20, according to the document released Monday by the U.S. trade czar.

The 16-page list contains some elements that might appear contradictory or confusing.

It says the U.S. will demand more opportunities for American suppliers for government procurement abroad, such as construction projects. But, in the next breath, it insists on preserving Buy American rules that limit such rights for foreigners. Why we need to care

Of that contradiction, Miller joked: “It’s called the mercantilist dream — we want you to open to us, but we don’t want to open up to you.”

Miller added that it was more likely a signal the United States wants Canada to stop demanding greater access to contracts at the state and local level.

There is a vaguely worded section on banking. It calls for more opportunities for U.S. financialservice providers, which Miller said could be interpreted as a call for Canada to accept U.S. deposit-taking banks.

It also demands the elimination of the disputesettlement system that has ruled in favour of Canada on softwood lumber.

However, it’s unclear how the U.S. would replace Chapter 19 — which, to Canada, was a make-or-break issue in the original 1980s trade talks.