In The Media

NAFTA round: Lead ministers for Canada, U.S., Mexico will not attend this time

by Alexander Panetta (feat. Eric Miller)

The Canadian Press
November 16, 2017

WASHINGTON – Call it the calm between two storms. NAFTA negotiators are gathering in Mexico City this week for what’s expected to be a transition round, nestled between the tumult of early talks and the deluge of drama expected next year in late-phase negotiations.

Things will be kept quieter by the absence of politicians.

The lead ministers for Canada, the U.S., and Mexico announced Wednesday that they won’t attend the session that concludes Nov. 21, the first time Chrystia Freeland, Robert Lighthizer, and Ildefonso Guajardo have not shown up in five negotiating rounds.

All three played down the need to get together this time, citing substantive discussions at the Asia-Pacific summit, and will remain in constant communication with their chief negotiators anyway.

But their non-presence illustrates something else: a view inside and outside government that this mid-negotiation round is expected to be a calmer exercise than what preceded, and what will likely follow.

The previous round concluded with the ministers practically squabbling on stage. The U.S. shocked its partners with a barrage of aggressive demands, and the politicians wound up at the closing news conference delivering thinly veiled lectures at each other.

It won’t happen this time — at least not publicly. The teams gathering in a tony enclave of Mexico City will include bureaucrats, professional negotiators, and some political staff, but there will be no big news conferences with politicians.

One official familiar with the talks said he expects countries will put off the most painful tradeoffs, while looking to negotiate the easier outstanding issues, on things like digital trade and regulatory co-operation.

”There’s still lots of work to do here. Having said that, I think everyone recognizes that the proposals made on the U.S. side make it difficult to get to an agreement,” the official said.

“Which is why we’re focusing on areas where we can make progress.”

In other words: Don’t expect big moves on irritants like agriculture and auto-parts rules of origin. Those two issues will come up for four days each, starting Saturday, according to a version of the work schedule seen by The Canadian Press.

Another difficult issue could surface sooner.

Mexican media reported that the government there is prepared to counter a demand for a so-called five-year sunset clause — which would terminate NAFTA, unless all countries renew it. Guajardo has reportedly said he’s willing to live with a watered-down version of that, which might include a mandatory review but not termination-by-default.

Some U.S. proposals at the last round left allies wondering whether it was trying to sabotage the talks.

One trade-watcher said the countries still have lots of less-controversial things to address. They have an opportunity to do that in this round, and deal with the end-game tradeoffs later.

Completing the easier things now at least allows some progress as they approach the final phase, said Eric Miller, head of Washington’s Rideau Potomac trade consultancy.

The countries hope to have a deal wrapped up by March. After that, the U.S. and Mexico enter national elections, and an agreement becomes all but impossible to achieve before 2019.

“This is going to tee up the inflection point — which will come in the next couple of months, where we will get to the do-or-die moment,” Miller said.

“At least they have the modernization agenda to talk about in this round.”

He said countries will also probe each other on the harder issues. Miller expects they will start seeking clues on each other’s willingness to compromise on their toughest demands.

“Really what the story of this round is, is figuring out where we go from here,” he said.

“It’s going to be a discussion of probing what is meant by some of these proposals, where flexibilities might exist, and are there solutions that might materialize in later rounds…

”Really it’s the aftermath of round four… We’re in this different reality now — so how do we get through this?”

The U.S. negotiating team isn’t just facing disgruntlement from abroad.

A number of American lawmakers have grumbled about Team Trump’s approach to trade. Three prominent Republican senators, and dozens of House members, have sent letters to Lighthizer expressing alarm about some American positions.

They criticized proposals on automobiles and the sunset clause. And they also ridiculed the wisdom of trying to use a negotiation to reduce the trade deficit. This week’s letter points out that the U.S. economy tanked during the Great Recession, the last time its trade deficit vastly improved.

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