Toronto Star

Sun could soon set on NAFTA negotiatio­ns

- 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 If the sunset clause proposal is not eventually withdrawn, however, it could well lead to the collapse of talks.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.
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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