Seeking more from NAFTA
Trump administration updates U.S. demands as negotiations continue
WASHINGTON — President Trump’s top trade official has issued new objectives for renegotiating the North American Free Trade Agreement — including some likely to irk Canada and Mexico, as well as the U.S. recording industry and other major business interests.
There are few surprises in the 17-page document, given recent revelations and sharp words from NAFTA negotiators. But a month before talks began, the Office of the U.S. Trade Representative made some notable additions and changes to the blueprint it initially outlined in July, adding a fresh degree of uncertainty to the talks, which continued this weekend.
Besides affirming that the Trump administration wants to rewrite key portions of the 23-year-old pact, including access to federal contracts and minimum local-sourcing requirements , to name two controversial ones, the U.S. trade office made clear it wants to open Canada’s protected dairy market and eviscerate a process in which foreign firms can sue governments for discrimination or expropriation.
The amended summary was released Friday, after Sen. Ron Wyden (D-Ore.) and civil society groups had criticized the U.S. trade office for failing to update the public on NAFTA renegotiations as required by law. Wyden had held up confirmation of two deputy trade nominees as a result.
Among the updated goals is new language that the U.S. would seek to limit liability for internet giants such as Google, Facebook and Comcast that host or transmit online content — a move that will be opposed by the U.S. music and recording industry, whose sales have been battered by piracy.
In a September letter to trade representative Robert Lighthizer, associations for musicians and record labels argued that giving online firms safe harbors would amount to “an open invitation to America’s trading partners to act as havens for piracy and refuges for those who illegally infringe American creative content.”
The internet was in its infancy when NAFTA went into effect in 1994, but it remains unsettled who and to what degree those in the online world will be shielded from punishment for spreading unauthorized copyrighted content, or even fake or biased news.
That’s why this is “a big deal,” said Nate Olson, a trade expert at the nonpartisan Stimson Center think tank, reacting to the new trade office objective.
“Cross-border data flows are the Wild West of the global economy,” he said. “Sorting it out will come down in no small part to the rules that govern these online platforms.”
NAFTA negotiators have mostly found common ground on digital trade, and have made significant progress on competition policy, customs, telecommunications and state-owned enterprises.
But the latest trade office summary identified several U.S. aims for which compromise will be hard to achieve.
U.S. officials explicitly stated, for example, that it would work to eliminate “unjustified measures” limiting U.S. dairy products’ access to Canadian markets. And, for apparent emphasis, the trade office inserted that one of its major goals — along with reducing the trade deficit with Canada and Mexico — would be addressing import and export monopolies that distort trade.
Canada controls imports of milk and other dairy products through a supplymanagement system. Trump has railed against the Canadian practice, warning earlier this year that the U.S. “would not stand for this.”
Canadian officials deny their policies are harming U.S. businesses, and say the U.S. similarly protects its dairy farmers. The U.S. is also taking aim at Canadian exports of softwood lumber.
In addition, the trade office indicated that it would press for fundamental changes to a NAFTA provision that allows investors who believe they have been treated unfairly by foreign governments to take their case to a special panel of arbiters whose ruling is final.
The latest summary does not say the U.S. intends to eliminate the socalled investor-state dispute settlement element, but new language suggests that rulings by the tribunal would be subject to U.S. government review and possible overrule. The U.S. Chamber of Commerce, which has insisted that such investor protections are necessary, would hate such a change as much as Canada or Mexico.
As in the initial set of objectives, the latest document outlines several top objectives only in vague terms, making it difficult to evaluate the chances of striking a compromise.
Among the most contentious is a U.S. proposal that would allow NAFTA to expire after five years unless all three countries agree to renew it. Mexico and Canada, as well as U.S. businesses, say such a sunset clause would inject uncertainty and undermine the value of the pact. In the summary, the U.S. trade office says it merely wants a mechanism to “assess the benefits of the agreement on a periodic basis.”
The trade office also didn’t specify how much it wants to strengthen the “rules or origin” for auto trade, that is, the minimum percentage of a vehicle’s production that must originate in North America — and specifically the U.S. — before it can enter any of the three NAFTA countries duty-free. Auto manufacturing is highly integrated in North America, and significant changes in sourcing requirements could be disruptive and costly.
The talks in Mexico City this weekend are the fifth round of negotiations and last through Tuesday. The three sides originally hoped to wrap up by year’s end to avoid complications from Mexico’s presidential election next summer, but there are such wide differences that talks have been extended to as late as March.
The tone of the negotiations turned frosty during the fourth round last month in Arlington, Va., when the U.S. pushed its most controversial demands across the table. That raised the specter of a stalemate that could prompt Trump to give the required six months’ notice before withdrawing from NAFTA. He has repeatedly threatened to pull out of the pact, and has suggested that a notice of withdrawal may be needed for the U.S. to win concessions from Mexico.
It was unclear whether U.S. officials, in this round, will put forward proposals such as new labor standards, or how Canada and Mexico might respond after earlier signals that some of the U.S. demands were simply unacceptable.
Analysts lowered expectations for any breakthroughs in Mexico City after it was announced that Lighthizer and his counterparts from Canada and Mexico planned not to attend the latest round.
“If the ministers don’t show up, it means the difficult, contentious issues won’t be taken up and resolved,” said William Reinsch, a longtime trade specialist and senior advisor at the law firm Kelley Drye & Warren in Washington.