NAFTA Update: April 5, 2018

NAFTA this week (March 27 – April 5, 2018)

Formal negotiations on NAFTA in DC have been replaced by political/ministerial meetings. US TR Robert Lighthizer is holding one-on-one meetings with his Mexican and Canadian counterparts late this week hoping the 3 countries can agree to an “ agreement in principle” for a renewed NAFTA.  No one knows what this will look like – there is not enough time to get through all the chapters by the end of next week (let alone the end of next year!) – so most are speculating the 3 countries will simply agree to some ‘tweaks’ on key chapters and a joint communiqué will be issued April 14 at the Summit of the Americas where Trump, Trudeau and Pena Nieto will meet.  Trump will be able to claim he got a new deal on NAFTA and Canada and Mexico will return home no doubt relieved the NAFTA turmoil of the past 7 months is over and later on (?) quietly pick up negotiations.  Question is – what is an “agreement in principle” it cannot be a trade agreement so will the provisions of the ‘new’ NAFTA,  April 14 version, simply be the status quo plus or minus a few changes here or there?  

 

Headlines and links to articles:

April 5 – Prime Minister Justin Trudeau offered a cautiously optimistic assessment of free trade talks between Canada, the U.S. and Mexico on Thursday, even as White House officials appeared to dampen expectations for a breakthrough in Peru next week.  CP wire

April 4 – Trump may get his deal in principle (by April 13, 2018), but it may be months, even years, before an official updated Nafta comes into force.  A look at the Political Calendar, combined with an escalating trade war with China,  shows what is driving Trump to get a ‘provisional’ North American deal before critical dates/deadlines come into effect  article:

  • April 13-14, 2018 Summit of the Americas
  • May 1: grace period from tariffs on steel and aluminum ends for Canada and Mexico (tho Trump might extend)
  • May 28: to get a deal through current Congress, process to approve the renewed NAFTA must start by this date in order to hold a vote before the November mid-terms which are expected to alter the composition of Congress and like. Many are skeptical these procedural steps can be done in such a tight schedule.
  • July 1: Mexico election – current President is in third place in the polls
  • September 1: new Mexico Senate meets – 3 months in advance of the new President comes to power.  Senate is the body that must approve renewed NAFTA.
  • November 6: US mid-term elections – the Republicans are expected to take losses in both the House and the Senate.

 

April 4 – U.S. Trade Representative Robert Lighthizer has decided against hosting an official eighth round of NAFTA negotiations and instead will hold ministerial meetings with his counterparts in Washington, DC, this week, hoping to make progress in the most sensitive areas and lay the groundwork for an agreement in principle by mid-April, sources close to the talks tell Inside U.S. Trade . Canadian Foreign Affairs Minister Chrystia Freeland and Mexican Economy Secretary Ildefonso Guajardo will meet separately with Lighthizer,  link

April 3Canada’s trade negotiator remains skeptical a deal is possible by the proposed  April 13/14 deadline being pushed by the US.  There are too many important issues and chapters that are far from complete to make this date work.   outstanding

April 2 – the US is pushing for an agreement on the broad details of a revamped free trade agreement with Canada and Mexico ahead of the Summit of the Americas, scheduled for April 13, where the hope would be that the deal would be revealed.  Bloomberg

 

CPTPP Update

 

Given the heavy legislative agenda before the Government it would seem unlikely a bill to implement the CPTPP will be tabled before the House rises for the summer (June 22nd).  Agriculture groups are anxious that Canada be one of the 6 countries that passes the trade deal so that its contents can come into force.  While the Conservatives are pleased with the signing, those on the trade committee appear to want to see a comparison of what was signed back in 2015 and the deal signed March 8 in Chile.  Some Liberals agree there is no reason not to fast track the bill, but others don’t want to be rushed into passing the deal.  If the implementation bill is introduced in October 2018 it could be passed  by June 2019; just in time to be promoted during a federal election. It normally takes about 10 months to 1 year for a bill to pass through all stages of legislation and final passage out of the Senate – so pressure must be kept on to ensure a timely passage.   Article:  link: ratification of CPTPP up in the air