NAFTA Update: January 30, 2018

Next Steps for CPTPP and NAFTA

The Comprehensive and Progressive Trans-Pacific Partnership (CPTPP):

The Minister of International Trade, Hon. François-Philippe Champagne, issued a News Release about the CPTPP on January 29, highlighting its progress and linking to a page that answers Frequently Asked Questions and to sector specific fact sheets. These are available for the Agriculture, Automotive, Culture, Intellectual Property, and Labour sectors. The CPTPP is expected to be signed on March 8 of this year and then ratified in each country. In Canada, this includes domestic engagement, tabling of the CPTPP in Parliament, and the introduction of implementing legislation.

The North American Free Trade Agreement (NAFTA):

The sixth round of NAFTA negotiations concluded on Monday, January 29, and the seventh round is scheduled for February 26 to March 6 in Mexico City. Canadian and Mexican negotiators offered alternatives to controversial U.S. proposals:

  • Regarding autos, Canada suggested including intellectual property and research in the calculation of U.S. content since these are areas where the U.S. dominates.
  • Regarding dispute resolution, Canada and Mexico are working on a proposal for an investor-state dispute system that would apply to them and not the U.S.
  • Mexico offered an alternative to the “sunset clause” requiring periodic review of the agreement without automatic termination.

The outlook at the close of these negotiations was relatively positive.

According to the Government of Mexico, significant progress was made. The Anticorruption Chapter and Annex of Information and Communication Technologies were completed and added to the previously completed sections. The Mexican Government also identified Sanitary and Phytosanitary Measures, Telecommunications, Technical Barriers to Trade, and the Sectoral Annexes for Pharmaceuticals, Chemicals, and Cosmetics as areas where “significant progress” was made. The NAFTA negotiating teams are trying to conclude these chapters before the next round starts in February. This progress is summarized in the following table.

Completed Sections Areas of “Significant Progress”
·         Anticorruption Chapter

·         SME Chapter

·         Competition Chapter

·         Sectoral Annex for Information and Communication Technologies

·         Sectoral Annex for Energy Efficiency

·         Sanitary and Phytosanitary Measures

·         Telecommunications

·         Technical Barriers to Trade

·         Sectoral Annex for Pharmaceuticals

·         Sectoral Annex for Chemicals

·         Sectoral Annex for Cosmetics

Simultaneously, tensions between Canada and the U.S. remain high. The statement of the US Trade Representative, Robert Lighthizer, mentioned the progress made in this round, emphasizing that negotiators finally began discussing some of the “core issues.” However, he leveled a number of critiques against Canada:

  • The Canadian perception that the U.S. is being unfair in trade negotiations is unfounded and unfair.
  • Canada’s rules of origin proposal might actually lead to less regional content and fewer jobs in all three countries than at present.
  • Canada’s proposal to reserve the right to “treat other countries better” than the U.S. and Mexico is unacceptable.
  • Canada’s recent trade action against the U.S. is unprecedented and “constitutes a massive attack on all” American trade laws.

This extensive list of grievances with Canada was not followed by equivalent complaints about Mexico. However, American criticisms of the Canadian approach were mirrored by Canadian complaints leveled by Minister of Foreign Affairs, Hon. Chrystia Freeland.