Sun could soon set on NAFTA ne­go­ti­a­tions

Toronto Star - - NEWS - Daniel Dale Wash­ing­ton Bu­reau Chief

WASH­ING­TON— Adding to the gloom sur­round­ing ne­go­ti­a­tions on the North Amer­i­can Free Trade Agree­ment, U.S. Pres­i­dent Don­ald Trump’s ad­min­is­tra­tion be­gan the lat­est round of talks by mak­ing a pro­posal loathed by Canada and Mex­ico: a “sun­set clause” that would au­to­mat­i­cally ter­mi­nate the agree­ment in five years if all three coun­tries did not ap­prove it again.

Trade ex­perts say the U.S. may sim­ply be is­su­ing ag­gres­sive de­mands as a ne­go­ti­at­ing tac­tic. If the sun­set clause pro­posal is not even­tu­ally with­drawn, how­ever, it could well lead to the col­lapse of talks. Cana­dian and Mex­i­can of­fi­cials have both slammed the idea in the past month. And it is fiercely op­posed by busi­ness groups in all three coun­tries, who say it would deny com­pa­nies the cer­tainty they need to make in­vest­ments.

“What man­u­fac­tur­ers want more than any­thing is cer­tainty and pre­dictabil­ity. And it’s rather hard to make long-term cap­i­tal de­ci­sions or sourc­ing de­ci­sions if there’s an au­to­matic sun­set of five years,” said Den­nis Darby, chief ex­ec­u­tive of the Cana­dian Man­u­fac­tur­ers and Ex­porters. “With a five-year po­ten­tial sword hang­ing over your head, I think what it’s go­ing to do is cause man­u­fac­tur­ers to not in­vest and be re­ally, re­ally risk-averse.”

“I think this will be one of the most dif­fi­cult (clauses) for the busi­ness com­mu­nity to ac­cept,” said Dan Ujczo, a trade lawyer and pres­i­dent of the Ohio-Canada Busi­ness As­so­ci­a­tion.

Jerry Dias, pres­i­dent of the Uni­for union that rep­re­sents Cana­dian au­towork­ers, said he would sup­port a sun­set clause on a bad fi­nal deal, op­pose it on a good fi­nal deal. Re­gard­less, though, he said the pro­posal is a “school­yard bully” tac­tic that con­veys “they don’t want a deal in the first place.”

The pro­posal comes amid a grow­ing con­sen­sus around the con­ti­nent that the talks might fail be­cause of Trump’s pro­tec­tion­ism. Prime Min­is­ter Justin Trudeau said Wed­nes­day he was “ready for any­thing,” and Dias said Thurs­day that “this thing is go­ing into the toi­let.”

“They want to hold this weapon over peo­ple’s heads to get them to sur­ren­der more, sur­ren­der more, more con­ces­sions, more con­ces­sions. But they’re not fool­ing any­body,” Dias said.

The sun­set clause was en­dorsed by Canada’s United Steel­work­ers. Na­tional di­rec­tor Ken Neu­mann said the threat of ter­mi­na­tion would “add some ac­count­abil­ity” for politi­cians mak­ing the kinds of prom­ises the orig­i­nal NAFTA has not ful­filled.

“We got sold a bill of goods with NAFTA,” he said. “If you would have had a sun­set clause, it wouldn’t have sur­vived go­ing for­ward.”

U.S. Com­merce Sec­re­tary Wil­bur Ross floated the sun­set idea in Septem­ber. It was for­mally put on the ne­go­ti­at­ing ta­ble late Wed­nes­day, said a source with knowl­edge of the ne­go­ti­a­tions.

“Yes, that’s our pro­posal,” Ross said at a Wed­nes­day event.

In a speech the day prior, the pres­i­dent of the U.S. Cham­ber of Com­merce, Thomas Dono­hue, de­scribed the pro­posal as a “poi­son pill” that “could doom the en­tire deal.”

The fourth round of talks, sched­uled to run un­til Tues­day in a sub­urb of Wash­ing­ton, is ex­pected to be the most chal­leng­ing to date. The U.S. is likely to in­tro­duce a con­tentious pro­posal to re­quire that a hefty per­cent­age of an au­to­mo­bile be man­u­fac­tured in the U.S. it­self, rather than just in the NAFTA zone, to be ex­empted from tar­iffs.

The specifics of the sun­set pro­posal were not im­me­di­ately clear. One key ques­tion is whether it would give the pres­i­dent uni­lat­eral author­ity to re­new NAFTA or if Con­gress would have to vote again as well.

Cana­dian min­is­ters did not ad­dress the pro­posal Thurs­day. Speak­ing on con­di­tion of anonymity, one of­fi­cial said, “We ex­pected a tough round.”

MARCO UGARTE/THE AS­SO­CI­ATED PRESS

Justin Trudeau and his wife, So­phie, as­sem­ble care pack­ages for vic­tims of the re­cent earth­quake in Mex­ico City at a Red Cross cen­tre on Thurs­day.

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