There are several divergent paths that talks could take, a former USTR official said.
The fact that the United States is “not even close” to Canada and Mexico on several contentious issues, including on proposals on government procurement, automotive rules of origin and antidumping/countervailing duties for seasonal/perishable imports, leaves open several general scenarios for how the renegotiation ultimately could play out, Kellie Meiman Hock, managing partner for McLarty Associates, said during a panel discussion on Thursday.
Talks could peter out this year either overtly or informally and essentially get pushed to next year; President Donald Trump could withdraw from NAFTA, a valid scenario especially in the run-up to the 2018 congressional midterms; the Trump administration could split NAFTA into a two-track bilateral agreement; or negotiators could agree to a “skinny NAFTA,” if talks on automotive rules of origin produce a satisfactory result for the U.S., Meiman Hock said during a Washington International Trade Association (WITA) event.
NAFTA talks are expected to resume in July with a meeting between all three countries’ trade ministers.
But an extended pause in talks could take place in “kind of a tacit way, where they say, ‘Yeah, we’re going to keep talking,’ and maybe there’s a meeting in July, but there’s not a lot of progress made, and it takes time,” said Meiman Hock, who worked at the Office of the U.S. Trade Representative before 2000 and had primary responsibility for trade negotiations with several South American nations. Also, “there’s a more overt way, where we could say, ‘Look, we’re not going to make progress right now; let’s wait until next year,’ and formally push the talks into next year.”
Backing up a statement made by National Economic Council Director Larry Kudlow earlier this month on cable news, Trump said during a speech at the National Federation of Independent Businesses 75th Anniversary Celebration in Washington on Wednesday that the U.S. might opt to break NAFTA into two bilateral agreements.
“[It] doesn’t have to be called NAFTA,” Trump said. “We can do one-on-one with Mexico; one-on-one with Canada.”
A two-track bilateral NAFTA would be “very difficult, economically” for Canada and Mexico, and both nations have “made quite clear” that they want to keep NAFTA trilateral, Meiman Hock said.
Also speaking during the WITA event, National Milk Producers Federation (NMPF) CEO Jim Mulhern said his industry is still focused on negotiating NAFTA as a trilateral agreement, but that splitting the deal in two would be acceptable as well.
“We work very well with the Mexican dairy industry, so it is a real collaboration,” Mulhern said. “Canada has not been as equal of a productive and positive partner in these negotiations, from our perspective, and if it takes dividing, doing these separately, to get a deal — getting Mexico done, and continuing negotiations with Canada, we could live with that.”
Trump and members of the U.S. agriculture community alike have criticized high Canadian dairy tariffs that have cramped U.S. dairy products’ access to markets north of the border.
While Mexico and Canada likely won’t agree to all of the U.S.’s most contentious proposals, “if there was some sort of an agreement reached on autos, you would probably see the administration package something together that they could call ‘NAFTA modernization,’ and push that forward,” Meiman Hock said.
U.S. ‘not even close’ to Canada, Mexico on NAFTA
