Gloves come off as trade talks hit impasse
Freeland blasts U.S. for ‘winner-take-all mindset’ in tense Washington news conference
WASHINGTON— The vast divide between Canada and the United States over the future of North American trade burst into public view on Tuesday as top officials for Prime Minister Justin Trudeau and President Donald Trump traded blame for their negotiating impasse.
In an acrimonious joint appearance that trade experts called highly unusual, Foreign Affairs Minister Chrystia Freeland and U.S. Trade Representative Robert Lighthizer exchanged sharp criticism while standing a metre from each other on a stage in Washington.
Their remarks went beyond the standard posturing over particular subjects of dispute. Their speeches confirmed that important parts of the NAFTA talks are going poorly, hampered by disagreements not only about policy but also about basic facts of continental trade.
Freeland, for the first time, challenged the Trump administration’s general approach to the negotiation, saying the “win-win-win” that Vice-President Mike Pence claimed to be seeking “cannot be achieved with a winner-take-all mindset or an approach that seeks to undermine NAFTA rather than modernize it.”
Certain proposals, she said, would “turn back the clock on 23 years of predictability, openness and collaboration under NAFTA.” She emphasized her opposition to a protectionist U.S. proposal for auto manufacturing, saying it would cost tens of thousands of jobs.
U.S. trade representative castigated both Canada and Mexico for their “resistance to change”
Lighthizer castigated both Canada and Mexico for what he called a “resistance to change,” saying they were fighting to preserve “one-sided benefits” enjoyed by their companies and refusing to endorse policies they agreed to as part of the Trans-Pacific Partnership deal that Trump killed.
They held the joint appearance with their Mexican counterpart at the end of a weeklong negotiating round at which U.S. negotiators delivered a series of demands so unpalatable to Canada and Mexico that trade experts were left wondering if Trump, who has been publicly indifferent about the future of an agreement he calls a “disaster,” prefers to blow up the talks.
Collapse did not appear imminent, but the three countries agreed, in a joint statement, that there were “significant conceptual gaps” between them. Freeland said she continued to hope for the best but would prepare, in a “no-fuss Canadian way,” for “the worst possible outcome.”
Freeland confirmed there are major divisions on at least five issues important to Canada: autos, dairy, government procurement, dispute resolution, and the “sunset clause” the U.S. wants to insert to terminate the deal in five years if a new endorsement is not agreed to.
The three sides agreed to abandon their swift schedule. They are now planning the fifth round of talks for a month from now, rather than their previous two-week rapid turnarounds, and extending their informal deadline into early 2018.
Although Freeland had previously opposed specific U.S. proposals, this was the first time a top Canadian official had publicly expressed broad concern about the American approach. She argued that the change in schedule was a positive sign about the Trump team’s intentions.
“What that says to me is something really significant, which is that there is goodwill in all parties, a real willingness to roll up our sleeves,” she said at a solo news conference.
Like Freeland, Bob Fisher, a U.S. negotiator in the original NAFTA talks, said he does not consider the delay a sign of a breakdown.
“I think it’s a necessary elongation of the process,” said Fisher, now managing director at Hills and Co. “You cannot put out ideas as unconventional, or ‘new approaches,’ as the U.S. has put out, and expect that in a week or two people can start to have substantive discussions. There’s going to have to be a lot of soul-searching in Mexico City and Ottawa.”
Asked if there are any circumstances in which Canada would walk away from the table, Freeland said the government remains committed to sticking out the talks. She noted that a mere two months have passed since the start of the process — a “nanosecond,” she said, by the standards of trade negotiations.
But with U.S. congressional primaries also being held in early 2018 and a Mexican federal election soon after, any delay may make a successful resolution even more difficult.
“The more days and weeks we let pass by, that 2018 political calendar becomes almost impossible. We have to use this month constructively, because there’s really no time on the back end. I don’t see how any trade deal can be announced in the winter of 2018 in the middle of primary season,” said Dan Ujczo, a Canada-U.S. trade lawyer in Ohio.
The day underscored that there are fundamental differences in the basic outlook of the Trudeau and Trump governments. Freeland, in her remarks, noted that the U.S. has a trade surplus with Canada, but she said deficits and surpluses are not a good way to measure a trade deal.
Most economists say the same. Yet Trump is focused on deficits, arguing that they show the U.S. is “losing.” Lighthizer shot Freeland a look as he said, “For us, trade deficits do matter. And we intend to reduce them.”