Canada’s chief negotiator says too soon to tell if new NAFTA by year end

Steve Verheul acknowledged that the U.S., which triggered the renegotiation of the continental trade pact, has yet to table detailed proposals on some of the most contentious issues. (Photo by Jadwiga Winiarska via Polish Institute of International Affairs/Flickr)

OTTAWA—Canada’s chief negotiator says solid progress is being made in talks to rewrite the North American Free Trade Agreement, but it’s too soon to tell if a deal can be reached by the year-end deadline set by the United States.

“The pace is very fast and the (negotiating) rounds are very closely squeezed together, which is a bit unusual, so there’s not as much time to do work in between rounds as we would ordinarily expect,” Steve Verheul said Sunday as negotiators wrapped up the second day of talks in the third round of negotiations.

“But we’re making good, solid progress.”

Verheul acknowledged that the U.S., which triggered the renegotiation of the continental trade pact, has yet to table detailed proposals on some of the most contentious issues, including its stated objectives to:

— Scrap NAFTA’s independent dispute settlement process, which Canada maintains is essential. That issue is up for discussion Wednesday so the U.S. may provide more detail then.

— Require substantial American content in vehicles eligible for duty-free movement within the North American free trade zone.

— Allow each NAFTA partner discretion to decide whether to opt into the investor state dispute settlement process, whereby corporations can sue governments for allegedly discriminatory practices.

— End Canada’s system of supply management for dairy and poultry.

On the latter three issues, Verheul said he does not expect to see any details from the U.S. during the third round, which runs until Wednesday.

Still, Verheul said there are 28 different topics being discussed at 28 different negotiating tables and “the U.S. has made proposals in most of those.” He said it’s possible that a couple of chapters may be wrapped up during this round.

“The U.S. has put forward a number of proposals. There are some important ones still to come, but they have put forward a number of them so we have plenty to work with for the time being,” he said.

The U.S.’s failure to lay all its cards on the table has prompted many stakeholders and trade experts to predict there is no way a deal can be struck by year-end. The Americans want a quick deal before NAFTA can become a political football in the run-up to next fall’s congressional mid-term elections and in next year’s Mexican election.

Verheul suggested it’s premature to conclude that a year-end deal is impossible but, at the same time, he declined an opportunity to say he’s confident the deadline can be met.

“We’ll make good progress in the next few rounds, I think, but the end game is always the hardest part and impossible to predict,” he said.

“I think I’ve been wrong most times that I’ve tried to predict when a negotiation would conclude.”

Even if a deal is struck by the end of the year, Inside U.S. Trade reported Sunday that, due to procedural requirements under American law, the earliest President Donald Trump could sign a deal would be March and implementing legislation would be unlikely to receive congressional approval before the summer.

Earlier Sunday, Unifor president Jerry Dias, who has been working closely with the Canadian government, said he believes the Americans have no intention of striking a deal by year-end. He predicted Trump will blow up the negotiations and come back to the table later next year, closer to the mid-term elections, with a “take it or leave it” proposal.

“My guess is there’s not going to be a deal. I don’t believe the U.S. is serious about getting a deal,” Dias said.

But Verheul said he has seen no sign the Americans are negotiating in bad faith.

“We’ve seen no indication of that so far. They’re continuing to engage,” he said, adding that the tone around the table is “quite constructive” for the most part, although there are “moments when things get a little more heated.”

The Canadian government, meanwhile, is getting kudos from unions for proposing that both Mexico and the United States commit to improved labour standards in a rewritten NAFTA.

Canadian officials contend that more stringent labour and environmental standards are the key to reversing the exodus of manufacturing jobs, particularly in the automotive sector, to low-wage Mexico. But it’s also pushing for and end to right-to-work laws in the U.S.

Such laws, in effect in 28 states, assert workers’ right not to join or pay dues to a union even while enjoying the advantages of unionization. Labour critics see the laws as essentially union-busting, aimed at starving unions of cash.

“We think the Canadian proposal on labour is a solid document … that can increase working conditions for middle-class families in both Canada and the United States and, of course, Mexico quite substantially,” said Christopher Monette, public affairs director for Teamsters Canada.

“We’re facing an exodus of jobs to Mexico but also to right to work states in the United States. And that should be just as concerning to Canadians.”

Dias said the Canadian government is holding “very, very strong” on its proposal for improved labour standards by both its NAFTA partners but the Americans have so far shown no interest in scrapping right to work laws.

However, Inside U.S. Trade reported that the U.S. intends to table its own proposals on labour standards, as well as on intellectual property, during the third round. Labour is on the agenda for Tuesday and Wednesday.