Slow progress made in NAFTA talks as Trump’s steel, aluminum, threats loom

The most recent round of North American Free Trade Act discussions concluded March 5 with only a few items concluded as U.S. President Donald Trump’s threats to impose a 25 percent tariff on imported steel and a 10 percent tariff on imported aluminum and possible retaliation from Canada and Mexico loomed in the background.

It was enough of an issue to make Canadian Foreign Minister Chrystia Freeland stop midway through the reading of her formal communiqué and discuss the issue.

“Last week, I issued a statement about the U.S. government’s pending announcement on steel and aluminum imports. What I said then remains Canada’s view,” Freeland said. “As a key NORAD and NATO ally, and as the No. 1 customer of American steel, Canada would view any trade restrictions on Canadian steel and aluminum as absolutely unacceptable.

“We will always stand up for Canadian workers and Canadian businesses. Should restrictions be imposed on Canadian steel and aluminum products, Canada will take appropriate responsive measures to defend its trade interests and workers. We will continue to stand up for our steel and aluminum workers and industry.”

Talk of saturating the U.S. market with Canadian skimmed milk powder while fluid milk exports from the U.S. to Canada was still restricted took to the back burner during this series of discussions. Instead, negotiations on what U.S. Trade Representative Robert Lighthizer called “a large number of difficult issues, very technical issues” were the focus.

3 of 30 chapters finished

In his communiqué following the talks, Lighthizer, said only three chapters on a renegotiated NAFTA were completed: Good Regulatory Practices, Administration and Publication, and Sanitary and Phytosanitary Measures. Sectoral annexes related to chemicals and proprietary food formulas were brought closer to completion.

“We are making substantial progress on Telecommunications and Technical Barriers to Trade. We have also agreed to include a chapter on Energy,” Lighthizer said. “These chapters are important and provide further evidence that all three countries want to upgrade and modernize NAFTA. But to complete NAFTA 2.0, we will need agreement on roughly 30 chapters. So far, after seven months we have completed just six. Now granted, these things tend to converge more toward the end of a negotiation.”

Lighthizer said the U.S. has two major goals in these negotiations.

“First, we want to update NAFTA to address modern trade issues. All three countries agree that NAFTA is outdated, and I believe we should be able to reach agreement on new issues like digital trade, labor, and environment, intellectual property and much more. We urge all parties to move more quickly on these issues,” Lighthizer said.

“Second, we believe that NAFTA should be rebalanced. This has been a longstanding U.S. concern about the treatment of our workers and businesses. From our point of view, among other things, changing the agreement so that it no longer encourages outsourcing, developing rules of origin that will fairly treat our manufacturing sector and workers, and reshaping the rules of government procurement are very important. We also need to make more progress on these points to conclude a new NAFTA. We continue to stress the need to act quickly.”

Freeland agreed NAFTA, while creating jobs, supporting growth and raising living standards for people in the three nations, needs to be modernized.

“It needs to reflect that technology, business and society have evolved. And it needs to be updated to broaden the benefits of trade to more people,” Freeland said. President Trump has said his most important goal is to help American workers and to help the American middle class.

“We in Canada have exactly the same goal for our workers and our middle class. This can and should be a shared project. That’s because trade is not a zero-sum game. In trade, we can all win. And we need to all win, in order to reach an agreement that will benefit all our people.”

Quick resolution

All three countries previously agreed to expedite the renegotiation process as much as possible to avoid clashing with Mexico’s presidential election on July 1 and midterm elections in the U.S. in November.

For his part, Mexican Economic Minister Ildefonso Guajardo said the pace of talks should increase but made it clear that Mexico’s position is that “NAFTA is in the best interest of all three nations.”

Lighthizer agreed, but said if a tripartite agreement proves impossible, the Trump administration is prepared to move on a bilateral basis, if agreement can be made.

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“We have tried to be clear and very specific about what we hope to see in a new NAFTA. We are prepared to work continuously to achieve a breakthrough. I understand that these talks are not easy for anyone. Each of us has our own political concerns. But we are at the point where we have very important decisions to be made. If the political will is there, I am certain that we have a path to a rapid and successful conclusion.”

Rep. Roger Marshall, R-KS, joined members of the House Ways and Means Committee as observers to the negotiations. Committee chairman Kevin Brady, R-TX, and Trade Subcommittee Ranking Member Rep. Bill Pascrell, D-NJ, led the group. Also joining in were Ways and Means Committee members Sander Levin, D-MI; Adrian Smith, R-NE; Tom Rice, R-SC; and Will Hurd, R-TX.

“My colleagues know how hard I have been fighting for NAFTA, I was ecstatic to be invited to join this trip,” said Marshall, a freshman member of the House. “I represent the second-most NAFTA dependent district in the country and I was honored to advocate on behalf of our Kansas producers with leaders from Mexico and Canada.

“It is only from having these conversations and one-on-one engagement with our trade partners that cooperation and solutions will be found. We must continue to have these discussions and move a trade agreement, that works for all parties involved, forward.”

Marshall called the negotiating teams “first class folks,” saying the best thing seen was serious engagement from all countries.

“It was clear from these meetings that all three countries have a sense of loyalty to each other because we have all seen how well this agreement can work for us. While there may be specific issues where we disagree, all three countries share the same goal of a modernized NAFTA in a way where no one is slighted.”

Larry Dreiling can be reached at 785-628-1117 or [email protected].