Not so fast: Why a NAFTA deal may not come as soon as some think
The Trump administration and its NAFTA partners are stepping up efforts to reach a tentative deal in the coming days as the U.S. prepares for potentially rocky discussions with China.
U.S. Trade Representative Robert Lighthizer met again Thursday with Canadian Foreign Affairs Minister Chrystia Freeland and Mexican Economy Minister Ildefonso Guajardo in an effort to reach an agreement, the third straight day for such meetings. Freeland said Thursday they’ve made “significant progress’’ on rules for cars, arguably the biggest sticking point.
Negotiators are plowing ahead to try to reach a deal by May 1, which is also the day temporary exemptions for U.S. steel and aluminum tariffs on imports from Canada and Mexico are due to expire, according to three people familiar with the talks who asked not to be identified. Lighthizer will join Treasury Secretary Steven Mnuchin on a trip to China that’s expected next week for discussions on how to resolve a simmering trade dispute.
However, a quick deal over Nafta is still far from certain and major differences remain on several issues, according to the three people. Even if a deal is struck on car rules, division remains over a sunset clause, dispute panels and other issues. When asked by reporters outside his office Thursday if a deal is possible in coming days, Lighthizer declined to comment. Mexican Foreign Minister Luis Videgaray, meanwhile, said, “we’ll see.”
The mood is more optimistic within the White House. Talks are “moving along,” President Donald Trump said Tuesday. “I could make a deal very quickly, but I’m not sure that’s in the best interest of the United States. We’ll see what happens, but we’re doing very well,” he said.
Still, all three countries have reason to hope for an agreement soon. Canada and Mexico were both temporarily excluded from recent U.S. tariffs on steel and aluminum, with the Trump administration linking permanent relief to the successful renegotiation of NAFTA.
Talks Thursday included White House aide Jared Kushner and Katie Telford, chief of staff to Canadian Prime Minister Justin Trudeau, reflecting the push to get a deal. Freeland, meanwhile, hailed progress on rules that govern what share of a car must be made within Nafta countries to be traded tariff-free under the pact.
“Something really significant has happened this week, which is that we have moved from a conceptual level on rules of origin on cars to really talking about the details,’’ Freeland said. “That is an essential step. I’m very glad we’re taking it.’’
Flavio Volpe, head of the the Toronto-based Automotive Parts Manufacturers’ Association industry group, cautioned that the U.S. hasn’t put many of its recent proposals in writing. He said a deal on autos is possible by Tuesday but warned other key disputes remain unsolved.
“I think we can have a deal if the Americans want to have a deal,’’ he said. “The space we’re in is positive, but I don’t have text’’ that details specific proposals or agreed changes.
Not everyone is applauding, however. Canada and the Mexico, typically united in the face of Trump’s demands, appear to be diverging on a U.S. proposal to require a share of a car –- 30 percent, according to Jerry Dias, head of labor group Unifor -- be made with a minimum wage of about US$15.
The provision would, if adopted, effectively mean that share is made in the U.S. or Canada. Mexico opposes it, according to two people familiar with talks, speaking on condition of anonymity. Volpe said there’s indeed “anxiety’’ on the issue but no firm proposal; Dias said Mexico has been “balking’’ at certain issues.
Negotiators have also finished work on the telecommunications chapter, two people familiar with the talks said last week, which would mean that seven of about 30 chapters have been completed.
There won’t be a deal by May 1 without major changes in negotiating positions, Dias told reporters Thursday. The U.S. still wants to eliminate anti-dumping trade panels allowed under Nafta’s Chapter 19, and “the Canadian team is never going to agree.’’ He also warned against announcing a deal in principle that doesn’t include key details. “Just because Donald Trump and Mexico say we’re in a rush, it doesn’t mean Canada needs to be.’’
The Trump administration faces political pressure over Nafta, including from Republicans from farming states who say changes to the pact could hurt exports and market access. Democratic lawmakers are also saying they’ve not been adequately informed on negotiations.
“We feel that, to date, the administration has failed to meet its consultation obligations under the Bipartisan Trade Priorities and Accountability Act,” according to a letter from 12 members of the New Democrat Coalition to Lighthizer on Thursday.
It’s not clear what the details of a tentative deal would include, or whether it would ever come into force. Time is running out for the U.S. to get a deal through Congress before midterm elections in November.
Freeland regularly says Canada will take the time needed to get a suitable deal. She stayed in Washington Thursday for Nafta talks, skipping a meeting Friday of North Atlantic Treaty Organization foreign ministers. Guajardo said this month he sees an 80 percent chance of an agreement by the first week of May. Negotiators are also rushing for a deal as Mexico approaches elections on July 1.