Money Two NAFTA negotiations but one is running off the rails

19:37  11 october  2017
19:37  11 october  2017 Source:   thestar.com

PM to visit Washington, Mexico next week

  PM to visit Washington, Mexico next week PM to visit Washington, Mexico next weekThe Prime Minister's Office says he will be in Washington on Tuesday and Wednesday, going on to Mexico on Thursday.

The North American Free Trade Agreement house of cards has been carefully constructed over 23 years to create a tolerable balance of liberalization This is the situation being reported by observers of the third round of NAFTA 2.0 negotiations . The negotiations have split into two separate tracks

This is the situation being reported by observers of the third round of NAFTA 2.0 negotiations . The negotiations have split into two separate tracks: one that is focused Ironically, these relatively non-contentious issues could deliver the biggest competitiveness gains to the North American economy.

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Stay on top of the NAFTA negotiations by signing up for the Canada Institute newsletter. This is the situation being reported by observers of the third round of NAFTA 2.0 negotiations . The negotiations have split into two separate tracks: one that is focused on modernizing and improving areas of

The North American Free Trade Agreement house of cards has been carefully constructed over 23 years to create a tolerable balance of liberalization and protectionism. Knocking out entire sections affects the whole system in predictable and

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In trade negotiations, the sum of polar opposite views does not always yield a happy medium — especially when one side refuses to move and the other side won’t accept a deal worse than the status quo. This is the situation being reported by observers of the third round of NAFTA 2.0 negotiations.

From left to right, Mexico's Secretary of Economy Ildefonso Guajardo Villarreal, Canada's Minister of Foreign Affairs Chrystia Freeland, and United States Trade Representative Robert E. Lighthizer gather for a trilateral meeting at Global Affairs on the final day of the third round of the NAFTA renegotiations in Ottawa on Sept. 27.© LARS HAGBERG From left to right, Mexico's Secretary of Economy Ildefonso Guajardo Villarreal, Canada's Minister of Foreign Affairs Chrystia Freeland, and United States Trade Representative Robert E. Lighthizer gather for a trilateral meeting at Global Affairs on the final day of the third round of the NAFTA renegotiations in Ottawa on Sept. 27.

The negotiations have split into two separate tracks: one that is focused on modernizing and improving areas common interest, and one that is characterized by differences so irreconcilable that they threaten to derail the negotiations.

Trudeau, Harper to cross paths in Washington

  Trudeau, Harper to cross paths in Washington Trudeau, Harper to cross paths in WashingtonOld political nemeses Justin Trudeau and Stephen Harper might literally cross paths. Harper is scheduled to attend a panel discussion on trade Wednesday afternoon, just as Trudeau is a few blocks away at the White House, discussing thorny trade issues with President Donald Trump.

The first round of Nafta negotiations got off to a tense start last month, with the Trump administration declaring the trade deal had “fundamentally failed.”CreditGuillermo Arias/Agence France-Presse — Getty Images.

President Trump's top trade negotiator sent Mexico and Canada another warning on Monday: We ' re running out of time. Lighthizer expressed disappointment that only six of the 30 chapters in NAFTA had been agreed upon after seven months of negotiations .

The modernization track is streamlining customs clearances, digital modernization, regulatory alignment, and facilitating trade for small and medium-sized enterprises. Much of the easy consensus is the product of Trans Pacific Partnership text that has already been approved by the three parties.

Ironically, these relatively non-contentious issues could deliver the biggest competitiveness gains to the North American economy. Border facilitation, e-commerce and regulatory alignment not only reduce transaction costs across the board, they make it easier for small traders to effectively compete in the market.

However, factions that seek to dismantle the NAFTA are focused on advancing instruments of protectionism and turning back the clock to an era where might made right, and short term political gains were more important than investor stability, manufacturing efficiency, and regional comparative advantage.

Trudeau talks gender equality (and a little about Trump) at Washington summit

  Trudeau talks gender equality (and a little about Trump) at Washington summit Prime Minister Justin Trudeau talked politely about U.S. President Donald Trump and talked up gender equality at the first event of his second official trip to Trump’s Washington. Interviewed onstage Tuesday night at the Fortune Most Powerful Women Summit, Trudeau stuck to his usual script for discussing the president he will meet with on Wednesday: avoid controversy, emphasize common ground.

Donald Trump has repeatedly threatened to rip up the North American Free Trade Agreement ( NAFTA .) What Trump is proposing would not only hurt the other two NAFTA partners, but US businesses as well. Meanwhile, time is running out.

NAFTA negotiations start Wednesday. Here's what you need to know. "Mexico may run a large trade surplus with the US, but the idea that it has 'taken advantage' of its large neighbor is surely wide off the mark," Capital Economics' John Higgins wrote in a note to clients.

Some of the most problematic issues are:

  • The proposed NAFTA sunset clause will dissolve the agreement after four years if U.S. expectations to reduce the trade deficit are not met. This will create terrible conditions for investors and producers whose livelihoods require predictability for decision making.
  • Dismantling investor protections against expropriation by a foreign government and eliminating the right of appeal against dumping claims similarly destabilizes the North American economy.
  • The U.S. proposal on government procurement offers a deal much worse than the current NAFTA or WTO arrangements. Canada will not agree to this and Ontario Premier Wynne may be forced to make good on her threat to impose a Buy Ontario rule to block U.S. suppliers from Ontario government contracts.
  • While there is room to update and improve these hot-button issues, U.S. negotiators are positioning their offers as take-it-or-leave-it. If so, Canada and Mexico may have no choice but to leave the negotiations, opening up the possibility that President Trump will launch formal withdrawal procedures. If this occurs, officials in Canada and Mexico will work with U.S. allies on strategies to block or delay a full U.S. withdrawal from the agreement.

In addition to the challenge of delivering a presidential trade agenda that promises to leave the NAFTA shaken and stirred, United States Trade Representative (USTR) is coping with new Congressional trade promotion authority measures. These are intended to create greater transparency and encourage interagency consensus and buy-in from legislators, but instead the process is adding sand to the gears.

Justin Trudeau’s mission to save NAFTA

  Justin Trudeau’s mission to save NAFTA On his trip to Washington, the PM will keep trying to befriend the volatile Trump, but the options to salvage the deal are narrowingIn what the minister of foreign affairs has called the most turbulent time in international relations since the end of WWII, Trudeau will meet with President Donald Trump to attempt to save NAFTA.

That was President Trump's message to Canada and Mexico Monday morning as all three countries began to conclude a round of NAFTA negotiations in Mexico City. Tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed.

Round 5 of NAFTA negotiations begins in Mexico City on Friday. "They could probably check some boxes off and make some progress," says Welles Orr, a lawyer at the firm Miller & Chevalier who served on the original U.S. staff that helped get NAFTA passed into law.

In theory, having proposed text vetted by responsible agencies and legislators seems like a very good idea. The reality, however, is that with only a week or two between negotiating rounds, U.S. personnel have not been able to get text and revisions cleared fast enough.

A predictable side-effect of the U.S. get-tough agenda is that new actions to protect one sector are likely to provoke retaliation and/or negatively affect market conditions for other U.S. sectors.

Thus, the proposal for new safeguards to protect Florida tomatoes from losing market share when Mexican tomatoes come in season (and are priced lower) could trigger retaliatory action by Canada and Mexico against Washington state growers during apple and pear season.

The NAFTA house of cards has been carefully constructed over 23 years to create a tolerable balance of liberalization and protectionism. Knocking out entire sections affects the whole system in predictable and unpredictable ways.

Make no mistake, Canada’s negotiators are not motivated by altruistic intent and many of their positions make little economic sense. Dairy protectionism remains a national religion and a web of nontariff barriers limits opportunities for U.S. beer, wine and grains (not to mention investment in telecommunications, financial services, and cultural industries).

But the basic principle of trade agreements, enshrined in the 1948 GATT, is to lock down a baseline of liberalization and to gradually whittle down the politically sensitive or difficult issues over time.

This approach reins in the worst excesses of governments trying to intervene in markets and lets business do business. A return to aggressive intervention pits one sector against another and leaves everyone worse off.

Laura Dawson is the director of the Canada Institute at the Wilson Center in Washington D.C.

Thousands of Canadians live in the U.S. on NAFTA permits. So what happens if Trump kills the treaty? .
Thousands of Canadians live in the U.S. on NAFTA permits. So what happens if Trump kills the treaty?She is representing one of her 100 clients at a criminal trial. Then Donald Trump terminates the North American Free Trade Agreement.

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