TABLE GAMES

Canada not happy with ‘sunset clause’

A top negotiator says it’s unclear if the new Nafta deal will meet Trump’s timetable.

WASHINGTON: The top US trade negotiator said on Monday that it was unclear whether Canada, Mexico and the United States could reach a deal to overhaul the North American Free Trade Agreement within the ambitious timetable set by the Trump administration.

In remarks before a third round of talks beginning on Saturday in Ottawa, Robert Lighthizer, the US trade representative, said negotiators were “moving at warp speed, but we don’t know whether we’re going to get to a conclusion, that’s the problem.”

“We’re running very quickly — somewhere,” Lighthizer said in a rare question-and-answer session at the Center for Strategic and International Studies, a Washington-based think tank.

The Trump administration has carved out a narrow path to victory on Nafta, pledging to hammer out substantial changes in a matter of months to a sweeping pact governing most of the North American economy.

In the coming round, negotiators are hoping to forge progress as they discuss specific proposals to address some areas of disagreement for the first time.

But reaching an accord looks increasingly difficult as the administration continues to push for ambitious changes that rankle Mexican and Canadian counterparts. Those include setting new requirements for the use of US-made goods and lowering barriers to exporting US agricultural products.

The White House is particularly eager to show progress on the trade agenda — one of President Donald Trump’s signature campaign issues — given the failure of Congress to repeal and replace the Affordable Care Act and the uncertainty about tax reform.

For a new Nafta pact to be approved by lawmakers in the three countries, negotiators say it needs to be largely concluded by the end of the year. They fear approval could be complicated by a series of events, including Mexico’s presidential election on July 1, 2018, midterm elections in the United States and provincial elections in Canada.

Legislation authorising Congress to pass a trade deal with a simple up-or-down vote is also scheduled to expire in July.

“The political calendar is such that if we don’t get a deal more or less by the end of the year ... it will get harder and harder,” Commerce Secretary Wilbur Ross, who helps lead the trade agenda, said last week.

New proposals by the Trump administration are adding pressure to the alreadycomplex negotiations.

Last week, Ross told an audience that the administration was considering adding a “sunset clause” to the North American pact. Under such a measure, the agreement would terminate after five years unless all three countries voted to continue it.

Canadian officials and business community representatives have expressed concern about a temporary pact.

David MacNaughton, Canada’s ambassador to the United States, criticised the provision. “If every marriage had a five-year sunset clause, I think our divorce rate would be a heck of a lot higher than it is right now.”

Chad Bown, a trade analyst at the Peterson Institute for International Economics, said a sunset provision would create so much uncertainty that businesses might end up ignoring Nafta altogether in their planning.

It can take years for businesses to recoup the returns from investments, by which time Nafta might no longer exist.

A Canadian government official briefed on the negotiations, speaking on condition of anonymity, said that Canadians were surprised by the proposal. Mexican officials could not immediately be reached for comment.

Lighthizer, the trade representative, declined to comment Monday on whether the administration would seek to add the five-year limitation to Nafta.

Also hanging over the negotiations is Trump’s ongoing threat to pull out of Nafta — an outcome that economists say would be a blow to industries whose supply chains stretch across the continent.

While Trump has the support of labor unions on trade, many business and agricultural groups have argued that withdrawing from Nafta could cut them off from major export markets and devastate their businesses.