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American Shipper

Round 5 of NAFTA talks ends in stalemate

Little progress was made this week on key divides in the negotiations over a new North American Free Trade Agreement (NAFTA), including rules of origin and a sunset clause, and Mexico is indicating negotiations could stretch beyond its July 2018 elections.

   When it was announced last week that trade ministers from United States, Canada, and Mexico were staying away from the latest round of North American Free Trade Agreement (NAFTA) talks in Mexico City, the hope was that negotiators could nonetheless make progress in a few areas where major gaps between the countries remain.
   But as the fifth round of talks wrapped Tuesday, the countries had reportedly made little movement on areas like rules of origin, dispute resolution mechanism, and a mooted sunset clause for a reworked deal.
   The New York Times reported that negotiators did make progress on more technical aspects of a reworked NAFTA, “including those that govern digital trade, telecommunications, anti-corruption, customs procedures and health and safety standards for food.”
   But sizable divides remain in areas like labor rights, where the United States and Canada are pushing Mexico to lessen the pay gap that allows companies to hire Mexican labor for a fraction of what they’d pay elsewhere in North America, and on content requirements for the automotive industry to qualify for zero tariffs under NAFTA.
   The content issue is among the most divisive, and is being seen by trade experts as a sort of bellwether for rules of origin content changes for other industries that rely heavily on the trade agreement.
   U.S. Trade Representative Robert Lighthizer, who did not attend the Mexico City round and also won’t take part in the next round in December in Washington, said he was discouraged by the intransigence of Canada and Mexico on the U.S.’s demands.
   “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,” he said in a statement after talks wrapped Tuesday. “Absent rebalancing, we will not reach a satisfactory result. I remain concerned about the lack of headway. I hope our partners will come to the table in a serious way so we can see meaningful progress before the end of the year.”
   The next time Lighthizer and his cohorts in Canada and Mexico are due to be involved in face-to-face talks is in January in Montreal. Until then, lower level negotiators will continue to try to make progress, which isn’t necessarily confined to formal talks.
   The stalemate between the NAFTA partners also portends lengthier renegotiations. Whereas the parties (primarily the United States) were pushing for a resolution to the talks by the end of 2017, that deadline was later pushed to March 2018. Following the fifth set of talks in Mexico City this week, Mexico indicated talks could continue beyond its national elections in July, the Wall Street Journal reported.
   Scott Lincicome, a trade lawyer and adjunct scholar with the pro-trade Cato Institute, quipped on Twitter that the NAFTA renegotiations were “Inching closer to my now-famous ‘Doha scenario,’” where a seeming never-ending set of trade rounds between intractable partners yields little actual results.
   Meanwhile, a Canadian trade official, quoted anonymously in the Toronto Star, said, “On the controversial proposals, we cannot really negotiate as there seems to be little room to do so and little logic to the proposals.”
   To which Lincicome added on Twitter: “Like negotiating with an Escher drawing.”
   The Star, speaking with former U.S. negotiator Robert Fisher, said that Canada’s and Mexico’s intransigence in talks could be a way to push out the renegotiations to allow pro-NAFTA business forces in the United States to pressure the Trump Administration to stand down from its more grandiose changes to the agreement.

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