The countdown is on
TRADE
President Donald Trump’s administration officially notified Congress Thursday that the U. S. intends to renegotiate the North American Free Trade Agreement with Canada and Mexico.
The letter by U. S. Trade Representative Robert Lighthizer formally launches a 90day countdown before talks between the three countries can begin. Here are five things to know about the 90day NAFTA renegotiation countdown.
Q Why the 90- day countdown?
A law called the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 sets timetables on how a President’s administration can go about negotiating deals. In particular, the law requires the President to give Congress written notice at least 90 calendar days before initiating trade negotiations with another country. This gives members of Congress and the administration time to line up specific negotiating positions. It’s also a way for Congress to ensure it’s involved in the process. “The formalities are important because typically, the Congress has to ratify treaties,” said Riyaz Dattu, an international trade and investment lawyer with Osler, Hoskin & Harcourt LLP in Toronto. “Congress is holding onto its jurisdiction to ensure they are comfortable with anything that is renegotiated.”
Q What does the U. S. want? A Lighthizer’s letter repeats a common refrain: NAFTA is due for an upgrade because at 23 years old, it pre-dates a lot of developments in the U.S. economy. “Our aim is that NAFTA be modernized to include new provisions to address intellectual property rights, regulatory practices, state-owned enterprises, services, customs procedures, sanitary and phytosanitary measures, labour, environment, and small and medium enterprises,” the letter states. The Trump administration also wants to change the dispute resolution mechanisms set up under the agreement.
Q Is this just some formal legal thing, or is it really a big deal?
A Both. The law imposes the timeline, so the administration has to respect that. But it is also significant because it brings some clarity to what Trump intends to do on NAFTA, at least in the near term. Trump has been all over the map on NAFTA. During the 2016 presidential election campaign, he talked about scrapping it. After a February meeting with Prime Minister Justin Trudeau, he talked about “tweaking” it. More recently, he has talked about subjecting it to a “massive” renegotiation. Lighthizer’s letter to Congress confirms that the Trump administration wants to renegotiate the deal, and not just scrap it. The letter also provides specifics about what the U.S. wants to discuss during the negotiations. Daniel Schwanen, vice president of research at the C.D. Howe Institute in Toronto, said the tone of the letter is very interesting. "There’s not a hint of protectionism, or at least U.S. protectionism,” he said. “It’s all about expanding exports or making gains abroad.” Q Why start the clock running now? Didn’t Trump already say he was willing to renegotiate NAFTA?
A It took until May 10 for the U.S. Senate to confirm Lighthizer’s appointment as U.S. Trade Representative. The White House couldn’t send the letter to Congress until Lighthizer was officially on the job. That said, some might be surprised the letter emerged just eight days after Lighthizer was confirmed. Shortly after Lighthizer’s appointment, Foreign Minister Chrystia Freeland said she expected Lighthizer would spend “a bit of time” in consultations before formally triggering the 90-day countdown. Dan Ujczo, an international trade and customs lawyer with cross-border business law firm Dickinson Wright LLP, said sending the letter out so quickly demonstrates a “need for speed” on getting the trade talks underway ahead of the U.S. midterm elections in 2018 and the Mexican presidential elections in 2018.
Q What does this mean for Canada?
A The letter might delay official trade negotiations until Aug. 15 this year, but it certainly doesn’t preclude the U.S., Canada or Mexico from engaging in preliminary consultations. “They will be setting out the process for their negotiations and the issues that will be subject to the negotiations,” Dattu said. The three countries have already sorted out a key issue, which is that future talks will be held on a trilateral basis. Mexico said Thursday that it welcomes the opportunity to renegotiate NAFTA. Freeland described the renegotiations as an “opportunity to determine how we can best align NAFTA to new realities — and integrate progressive, free and fair approaches to trade and investment.”