Little progress made on recent NAFTA talks

(Photo: Shutterstock)

(Photo: Shutterstock)

As the talks concluded last week on Round 5 of the North American Free Trade Agreement (NAFTA), the 3 NAFTA ministers included among the 30 negotiating parties agreed to “step back” to give negotiators additional time to "analyze proposals and conduct internal consultations,” according to LandLine Magazine.

Round 5 of the negotiations focused on plugging holes found in the agreement allegedly “created by tough demands from the United States.” Robert Lighthizer, the U.S. Trade Representative, had mixed comments about whether the negotiations led to any progress. “While we made progress on some of our efforts to modernize NAFTA, I remain concerned about the lack of headway.”

Lighthizer added, “Thus far, we have seen no evidence that Canada or Mexico are willing to seriously engage on provisions that will lead to a rebalanced agreement. Absent rebalancing, we will not reach a satisfactory result.”

Canada’s thoughts

Canada was represented in the trilateral negotiations by its  Foreign Affairs Minister, Chrystia Freeland. She confirmed differences remain between Canada and the United States, MSN reports. “There are some areas where some extreme proposals have been put forward, and there are proposals that we simply cannot agree to.”

Compared to Lighthizer though, Freeland’s expectations in the trilateral talks still has that hint of optimism, expressing Canada’s stance to “hope for the best and prepare for the worst and Canada is prepared for every eventuality.”

One area of concern was the potential addition of a “sunset clause” to allow countries to exit the agreement. Freeland said it is redundant, and as currently written, is one of Canada’s “red lines.”

In a press conference by the foyer of the House of Commons, Freeland’s analogy of the “red lines” provided a somewhat realistic comparison.

“I’ve been married for 19 years; when my husband asked me to marry him, he didn’t say every five years we’re going to check whether we want to get divorced or not. We don’t think that’s a good foundation for a lasting relationship.”

Mexico’s opinions

Mexico’s representative, Economy Minister Ildefonso Guajardo, reacted to Lighthizer’s comments about the lack of direction, Reuters reported. “We’re prepared to work towards that goal [of rebalancing], provided it doesn’t limit Mexico’s ability to produce and export,” he said in a press conference.

Mexico ended up agreeing with Canada on the issue of a U.S. proposal changing the rules about the shipping of automobile parts necessary for manufacturing vehicles. Consistent to President Donald Trump’s political promise of bringing jobs back to the United States under the slogan of “America First,” the administration wants about 85% of all autos build in North America to use North American parts, with 50% of that coming from the U.S.

Mexico countered with a proposal that a Reuters unnamed sourced viewed positively. “I think Mexico is being helpful in using a counterproposal to crystallize their views.”

Mexico does agree with the U.S. that there should be a “review of the accord every 5 years,” a clause that Canada’s Freeland explicitly did not view favorably. The same Mexican officials hoped for the chapters about telecommunications and e-commerce to finally be closed in Round 6, to be conducted in Montreal in late January.

Stay up-to-date with the latest commentary and insights on FreightTech and the impact to the markets by subscribing.