By Randy Gordon, President
U.S. and Canadian trade officials intensified negotiations this week in an effort to determine whether Canada will be included in a trilateral North American trade agreement.
Negotiations between U.S. Trade Representative Robert Lighthizer and his Canadian counterpart – Foreign Minister Chrystia Freeland – resumed for a third day today after marathon sessions that began Wednesday (Sept. 5). Freeland on Thursday repeated her description of the talks being “positive and constructive.” She did not elaborate on the trade provisions being negotiated nor on areas of disagreement. “We are making good progress,” Freeland said Thursday after the second meeting of the day with Lighthizer and other U.S. trade officials. “We continue to get a deeper and deeper understanding of the concerns on both sides.”
However, it is known that two of the most contentions topics involve Canada’s trade-distortive dairy policy and the U.S. delegation’s demand to remove one of the key dispute-resolution sections contained in the North American Free Trade Agreement (NAFTA) – Chapter 19. Canadian Prime Minister Justin Trudeau declared again on Wednesday that Canada is willing to negotiate further on dairy policy – although he again defended Canada’s dairy program that uses quotas and tariffs to shield Canadian dairy farmers from foreign competition. In the Trans-Pacific Partnership trade agreement, Canada agreed to open only 3.25 percent of its domestic dairy market to imports. Trudeau also was adamant against removing NAFTA’s Chapter 19, under which independent panels from each of the three countries resolve trade disputes; many U.S. industries also support retaining Chapter 19 to avoid having disputes resolved in Mexican or Canadian courts. Trudeau also said Canada is firm on wanting to retain NAFTA’s “cultural exemption,” which allows Canada to maintain a system of regulations and subsidies intended to protect “Canadian content,” which applies particularly to its media entities.
Meanwhile, Mexico’s chief trade negotiator – Kenneth Smith Ramos – told an aluminum industry event in Mexico that he hoped Canada and the United States would reach an agreement by this weekend, at which time Mexico would reenter the negotiations, at least briefly, to complete a trilateral trade deal. Thereafter, any formal agreement will need the approval of the three countries’ legislative bodies.
In addition, members of Congress weighed in this week, with many expressing the view that a final deal must include Canada given the interconnected supply chains and economies of the three countries. On Thursday, several key Democrats, including House Minority Leader Nancy Pelosi, D-Calif., and the ranking member of the House Ways and Means Committee – Rep. Richard Neal, D-Mass. – warned that if their party wins the House majority during the November mid-term elections, they strongly will consider rejecting a U.S.-Mexico-only agreement or an accord that doesn’t raise U.S. wages. Republicans also have raised the importance of including Canada in the final deal. Senate Finance Committee Chairman Orrin Hatch, R-Utah, issued a statement Aug. 27 following the announcement of a preliminary U.S.-Mexico deal that to achieve the goal of ensuring that “American families continue to benefit from lower prices, better jobs and increased productivity” and “the leadership of American businesses, manufacturers, farmers and ranchers (is maintained)…a final agreement should include Canada.” The House Ways and Means Committee and Senate Finance Committee are the two committees of Congress with jurisdiction over trade agreements.