Since January the NAFTA negotiations have gone through a roller coaster of peaks and valleys.
CAF has created an International Trade update covering January 2018 to the present, to update members on the state of negotiations. This member-only update is available here.
The entire negotiating process has been characterized by unrealistic deadlines, unreasonable demands from the US administration and a historically unique situation where much of US industry does not support the trade policies of a Republican administration on free trade, tariffs or other policies.
Recent media reports suggest that progress is being made between the US and Mexico, especially relating to autos. These discussions are moving quickly; it is likely that Mexico will agree to many of the US demands in auto rues of origin, and in most cases these are issues that Canada would agree with. Pushing the negotiations is the transition in Mexico to a new government/parliament, which will happen in December. To have the current parliament vote on a deal, negotiations would need to conclude by the end of August.
There has been something of a change in tactics by the US administration in July. Until recently it was fairly clear that the US was eager to double down on its rhetoric against trade agreements and the imposition of a series of tariffs on imports from all countries (steel and aluminum) or specifically from China.
Toward the end of July this approach changed somewhat: Trump struck a vague “deal” with the EU on automotives, and at the same time the US and Mexico started to discuss auto rules of origin under NAFTA. Taken together these actions may signal a willingness to show positive progress on trade - and not simply criticize it.
While Canadians have been sidelined in these auto discussions it is worth understanding that disputes in automotives are 100% between the US and Mexico. They are dealing with issues such as wage rates in Mexican factories etc. It is also clear that the US and Mexico are trying to wrap up their issue regarding textiles. Given that most textile issues (especially TPL levels) are bilateral Canada-US issues, Canada will need to conclude those talks with the US.
The biggest risk to the negotiations is timing. The US is running amok imposing duties on various products owing to concerns of “national security.” Neither Canada or Mexico would agree to renew NAFTA while still facing the prospect of punitive duties favoured by the administration. Without that guarantee there is no deal; we will miss the Mexican deadline for ratification and negotiations will spin out into 2019.
For more information, CAF members can refer to our International Trade Update for August 2018. The document outlines key issues in the negotiation thus far, provides a comprehensive timeline and potential next steps. Anyone with concerns regarding specific NAFTA issues is encouraged to contact Executive Director Bob Kirke at email@example.com.