'Good Distance' Between US and Canada in NAFTA on Five Key Areas, Canadian Foreign Minister Says
There’s a “good distance” between U.S. and Canadian positions on Canadian dairy supply management, automotive rules of origin, dispute panels, government procurement, and a U.S. proposal for a sunset clause in NAFTA that would automatically expire the deal after five years unless all parties agree to extend it, Canadian Foreign Affairs Minister Chrystia Freeland said during an Oct. 18 press conference. “If we knew where the landing zone was today, we wouldn’t have so much work ahead of us,” Freeland said after the conclusion of the fourth NAFTA renegotiation round in Washington. “I don’t want to sugarcoat things, either for our negotiating partners or for Canadians.”
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She added that it is “very significant” that parties agreed to a U.S. proposal to extend time between rounds and to extend talks at least through the first quarter of 2018, which she pointed to as a sign of good will among the parties. While “some of the really hard issues came to the table” during the fourth round, the countries’ officials have been candid about differences, which is “a good thing,” Freeland said.
In an earlier press conference with her U.S. and Mexican peers, Freeland defended Canada’s stance against a U.S. proposal to put in place a 50 percent U.S. domestic content requirement for automobiles and her country’s ongoing battle to maintain NAFTA’s binational antidumping and countervailing duty dispute settlement process, despite a U.S. proposal to scrap it. Later, she also railed against a U.S. government procurement proposal that she said would give Canada and Mexico combined less access to the U.S. government procurement market than Bahrain. “We find that proposal hard to understand,” she said.
Canada proposed a procurement provision similar to the one in the EU-Canada Comprehensive Economic and Trade Agreement, she said. What we say to our American partners is if we are able to achieve this with our partners across the Atlantic, surely, that level of government procurement access, we should be able to achieve with the neighbors with whom we share the world’s largest border.”
U.S. Trade Representative Robert Lighthizer during the closing trilateral press conference criticized what he said is a lack of engagement from Canada and Mexico to help the U.S. reduce its overall trade deficit, as well as a lack of progress on areas including anticorruption and digital trade during talks (see 1710170056). He also derided a “national manufacturing policy that is largely dependent on exports to the United States without balance,” apparently referring to Mexican policies supporting maquiladoras, which are factories run in Mexico by U.S. companies. He said that “continuing to design” such a policy “cannot long continue.” Lighthizer said it’s “unreasonable” to expect the U.S. to “continue to encourage and guarantee U.S. companies to invest in Mexico and Canada primarily for export to” the U.S.
Speaking to reporters after the trilateral press conference, Lighthizer voiced concern that companies have enjoyed non-market benefits through NAFTA’s ISDS mechanism, which he said is a sort of free “political risk insurance.” “It’s always odd to me that businesspeople come around to me and say, ‘Oh, we just want our investment protected.’ Well, so do I. I would love to have my key investments guaranteed,” Lighthizer said. “But of course, it doesn’t work that way in that market."