So we don’t have a thread about the NAFTA renegotiation going on, and I figured we should have one.
A bit of background is in order. NAFTA is the treaty that has opened up trade between Canada, the USA, and Mexico. It was signed in 1994, after half a decade of negotiations. It has led to over two decades of profitable trade, job creation, and economic growth for all three countries, and today we are each other’s largest suppliers and customers, and most companies larger than a mom-and-pops shop in any of our countries has either a supply chain stretching across at least one border or hires service firms on the other side of the border. To be sure, trade has not always been smooth, but NAFTA includes conflict arbitration clauses that have resolved conflicts, and which have been activated less and less as time went on, a testament to how easy trade has become.
Only a complete idiot would call this treaty a disaster and try to withdraw their country from it.
Which leads us of course to the USA electing a complete idiot who called this treaty a disaster and is trying to withdraw his country from it.
Negotiations have started; the opening round wrapped up in Washington last week
, with the next one taking place in Mexico in early September, then in Canada in late September, and on and on like that. This first round was mainly opening statements and declarations of intents, and is reported to have been quiet and friendly. A joint statement at the end of that meeting stated that all three countries are interested in modernizing the now 23-year-old treaty. By contrast, the tiny-handed orange Nazi tweeted that negotiations were difficult and unlikely to succeed, and that termination is very probable
. Most people ignored that tweet, save for Hamilton mayor Fred Eisenberger who mocked him for it
So what’s at play? As with any negotiation, each country has a different agenda. As far as I know, these are the top priorities:
• An exception to the “buy American” policy in US government contracts to include Canadian goods and services, opening up a lucrative new market.
• New ‘progressive’ chapters in the agreement
to focus on labour safeguards, environmental protections, gender equality, a new investor-state dispute settlement process, but most notably a chapter dedicated to Indigenous people
• Abolishing Article 19.
That’s the third-party arbitration clause which was originally fought for by Canada, and subsequently used to resolve several disputes, in particular with regards to softwood lumber, to their benefit. US companies, in particular in softwood lumber, hate that one. But with the WTO now in place and regulating trade disputes (that did not exist back in 1994), it may not be the victory US companies expect.
• Stricter country-of-origin regulations on the auto industry
. One of the major hallmarks of US manufacturing and also one of the major pieces of the US trade deficit is car manufacturing, and a country-of-origin rule would require a certain proportion of the car’s construction to be done in the USA. To be fair, that rule was also part of the original NAFTA, but did not cover the car’s electronic systems, which were a minor thing back in the early 90s. That’s one thing the USA wants to change. Worthy of note, all major US auto makers have come out against this idea.
• Mexico has been most vocal about wanting these talks to be done and the new treaty signed by 2018
. The current Mexican government is pro-business, but next year they are heading into an election with a new candidate (term limits prevent the current president from running again) facing off against a left-wing opposition. The last thing they want is uncertain and slow trade negotiations with a hated US president who called their people criminals and rapists dominating the headlines during their campaign. They want these talks over and a shiny new treaty to campaign on. But we cannot overstate that this is an unprecedented fast pace to negotiate an international trade treaty; these things usually take years.
• Mexico also wants new regulations of cross-border investment and protection of intellectual-property rights
. None of those issues were part of the original NAFTA, mainly because they were not international issues back in the 90s.
Last week the three nations agreed to a confidentiality agreement
surrounding the negotiations, a standard practice. That does mean news about the talks will slow to a trickle. So I figured a thread to share info, debate the issues, and discuss the rumours, will be interesting.