Round 4: Will NAFTA talks end on time?
- The fourth round of talks to renegotiate NAFTA will be extended two days, lasting from Oct. 11 to Oct. 17, sources told Reuters and Bloomberg this week.
- The extension raises doubts on the negotiating timeline, originally set to conclude by 2018 after seven rounds of talks. However, rising tensions over U.S. protectionist policies are threatening to dismantle or at least slow progress, according to various reports.
- The U.S. recently notified Congress it may change its trade remedy rules, which if applicable to NAFTA, would not allow for the new deal's ratification until March 2018, Forbes reports. Meanwhile, Mexico's Economy Minister recently said he hoped a new deal could be signed by Spring 2018.
The facade of a united front for a quickly renegotiated NAFTA is beginning to tumble under the pressure of conflicting trade interests and philosophies.
The U.S., Canada and Mexico ended the third round of talks on a high note two weeks ago, proudly announcing they had, for the most part, completed a new chapter that would extend trade benefits to small and medium enterprises.
"The chapter will serve to support the growth and development of SMEs by enhancing their ability to participate and benefit from the opportunities created by this Agreement, including through cooperative activities, information sharing, and the establishment of a NAFTA Trilateral SME Dialogue," the negotiators said in their closing statement.
It was a much-needed victory for the neighbors. Reports of slow progress and national posturing dogged the talks, as maligned-proposals like a "sunset clause" forced top ministers to defend their interests. Two rounds of "progress" with no textual achievements, meanwhile, undermined the credibility of speedy talks.
Last round proved different as the ministers boasted of breaching dozens of topics, while nearing conclusions on customs and trade facilitation, digital trade and good regulatory practices. Reports also suggest negotiators talked about energy trade, gender and indigenous peoples during the third round.
The news would seem to set up the fourth round as a resounding success, except for the fact the aforementioned topics are generally considered the easiest to discuss. In other words, the toughest negotiations are still to come, and the signs of rising tensions are beginning to show.
For one, the controlled veil between public and private discourse on the subject has been lifted.
Business lobbies have always been outspoken, but both the U.S. Chamber of Commerce and Mexican officials this week flagged a (separate) set of red flags that could undermine the deal altogether.
"We’ve reached a critical moment, and the Chamber has had no choice but to ring the alarm bells,” U.S. Chamber President and CEO Thomas J. Donohue said to business leaders in Mexico City Wednesday. “Let me be forceful and direct. There are several poison pill proposals still on the table that could doom the entire deal."
These poison pills include: the U.S. proposal for a sunset clause, which would automatically terminate the deal after five years; an increase in rules of origin, which the U.S. auto industry staunchly opposes; the elimination of the investor-state dispute settlement mechanism; and changes to NAFTA government procurement rules under a "Buy American" guise.
Meanwhile, The Wall Street Journal reports six Mexican senators announced they would automatically reject a renegotiated NAFTA if any of six "red lines" were crossed. In addition to the sunset clause, dispute settlement, procurement and rules of origin, the senators also noted they would reject a deal that protects U.S. fruit and vegetable growers from Mexican imports or removes preferential trade status for Mexican textiles.
Even Canada's minister, which in the first few rounds appeared to act as a mediator with significant leverage, is seeing increased tension with the U.S. Just prior to the third round of talks' conclusion late September, the U.S. Commerce Department began a trade spat against Canada's Bombardier.
Perhaps it's fitting the negotiations were extended two more days, given all the bilateral issues to be resolved. Yet, it still seems unlikely the deal will fall apart this round. After all, a few "easy" topics — a few of which are of special interest to supply chains — can still be addressed successfully.
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