Canada watches nervously as US, Mexico work out NAFTA deal

Posted by On 12:49 PM

Canada watches nervously as US, Mexico work out NAFTA deal

Both U.S. and Mexican officials have said they are close to reaching a deal on North American Free Trade Agreement, possibly within the next few days, a prospect that NAFTA's third partner, Canada, has only been able to observe from the sidelines.

The U.S.-Mexican talks are expected to continue into next week and it is unclear to what extent Canada will be to weigh in, if at all.

U.S. Trade Representative Robert Lighthizer has been meeting exclusively throughout the week in Washington, D.C., with his Mexican counterpart Economic Minister Ildefonso Guajardo to hammer out a deal, and both sides say they are very close. Canadian Prime Minister Justin Trudeau has tried to tamp down any fears that his country was being sidelined, arguing Canada is still very much involved in the process and not alarmed by the U.S. talking directly with Mexico.

"We are encouraged by the optimism expressed by the U.S. and Mexico ... [and] continue the hard work of modernizing and negotiating a better deal for all of us,” Trudeau said Thursday in British Columbia following a Cabinet meeting.

[Related: Trump touts trade negotiations with Mexico, criticizes Canada]

Steve Globerman, senior fellow at the Fraser Institute, a free-market Canadian think tank, said the talks this week clearly reflected a divide-and-conqueror strategy by the Trump administration. "If the U.S. and Mexico come to an agreement in principle it is going to put more pressure on Canada to bend at the margins. ... It makes Canada a little more vulnerable."

The hope, Globerman said, is that if a deal were struck between the U.S. and Mexico, it will involve issues of little concern to Canada. The main item supposedly being discussed this week was the standards for cars and truc ks to be made in North America in order to be tariff-free. The current standard requires 62.5 percent of the components to be North American but the Trump administration wants it as high as 85 percent. "Whatever shakes out in terms the percentage of production that can be in Mexican plants ... Canada could live with that," Globerman said.

What really would be an issue is if Mexico agrees to do away with the trade deal's investor-state dispute resolution system process and allowed disputes to be settled in U.S. courts instead.

"That would leave Canada in a tight spot because that has been a non-negotiable item for them," Globerman said. The deal's existing system for resolving private corporations' objections to a nation's trade policies is seen as key to protecting some Canadian industries, but the Trump administration has loudly opposed the current system.

Canadian business groups are c learly worried by the current state of affairs.

"Right now we're facing a period of unique uncertainty with regards to our trade relationship with the United States and elsewhere," said Michael Hatch, chief economist for the Canadian Auto Dealers Association told the Toronto Globe and Mail Friday, calling the NAFTA talks "of vital importance for our prosperity as a country."

Comments Wednesday by Jesus Seada, a trade policy representative for incoming Mexican President Andres Manuel Lopez Obrador, who was present at the D.C. negotiations, drew wide attention in Canada when he appeared to confirm fears that Canada was being locked out. "I don’t see any reason why they have to come after we finish. It’s up to [U.S. Trade Representative Robert] Lighthizer to organize his time.”

That appeared to contradict comments the same day by Guajardo that a deal would "lead to a trilateral meeting with Canada." Guajardo is part of the current administration of President Enrique Pena Nieto. Obrador's administration will take over in December, and Nieto's administration is pushing to finish a deal before its time runs out.

Source: Google News Canada | Netizen 24 Canada

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