NAFTA talks may be upset by TPP
Pacific trade announcement surprised stakeholders amid crucial ongoing negotiations
MONTREAL— The sixth round of NAFTA talks began Tuesday with dramatic twists in the trade plot as Canada and Mexico signed a new 11member transpacific trade pact without the U.S., and President Donald Trump took a hard swing at America’s commercial competitors.
Canada’s and Mexico’s courting of other trade partners culminated in a new Pacific Rim trade deal that surprised key industry stakeholders and became the backdrop to the formal start of a crucial negotiating round for the troubled North American Free Trade Agreement.
What first appeared to be a negotiating success later looked like a potentially hollow victory as reality sank in: Canada has embraced a new deal that makes significant concessions and will allow more foreign competition for its auto industry and supply-managed agricultural sectors, such as dairy, eggs and poultry. Critics say it will hamstring negotiators here.
“In order to send Trump a message that we’re free traders, we just undermined everything that’s going on here,” fumed Unifor president Jerry Dias. “NAFTA is 24 per cent of the world’s GDP. We’ve got much more skin in the game as it relates to our trading relationship with Mexico and the United States, and we just signed a deal that we will benefit very little from but severely undermine what it is we are trying to accomplish.”
Prime Minister Justin Trudeau said it was “a great day for progressive trade around the world.”
But in Washington, Trump imposed stiff new tariffs on imports of washing machines and all solar products, saying the moves “uphold a principle of fair trade and demonstrate to the world that the United States will not be taken advantage of anymore.”
Tariffs as high as 30 per cent on solar panels will affect both Canada and Mexico, though the biggest impact will be on Chinese manufacturers, Bloomberg reported.
Trump repeated his warning about NAFTA.
“NAFTA’s moving along pretty well,” he said. “I happen to be of the opinion that if it doesn’t work out, we’ll terminate it . . . We’ll see how it works out.”
Canada’s chief negotiator, Steve Verheul, declined to comment on Trump’s remarks as he met reporters in the hallway of the downtown Hotel Bonaventure, where multiple teams of negotiators are meeting.
“We have high hopes for making progress this week, but of course it depends on the other partners as well,” he said.
Verheul and Mexico’s chief negotiator, Kenneth Smith Ramos, said the new Trans-Pacific Partnership (TPP) agreement shows both countries are serious about “modernizing” trade deals, including NAFTA.
Yet despite declarations by Canadian officials that Ottawa is open to compromise on at least three of five areas it has dubbed American “poison pill” proposals, Verheul made clear that Canada has no intention of bringing forward a formal counterproposal to rebuff U.S. demands for greater protections for its domestic auto industry.
Canadian officials say Ottawa is open to U.S. demands for a periodic review of the deal — but not a fiveyear kill or “sunset” clause — and is open to changes to the dispute resolution process to settle corporate trade challenges under NAFTA’s chapter 11. Canada remains staunchly opposed to U.S. demands on agriculture. One official said the U.S. goal was aimed at dismantling Canada’s supply management system for products such as dairy, poultry and eggs.
However, that too may be complicated by TPP concessions to allow tariff-free imports of up to 3.25 per cent of the Canadian market.
“How much more is the government intending to carve out?” said Jacques Lefebvre, head of the Dairy Farmers of Canada. “Because I can tell you from the dairy sector, the answer is zero. No more.”