With the United States and Mexico in bilateral trade talks, is Canada getting the cold shoulder on NAFTA negotiations? Is Ottawa being snubbed by Washington, as reports have suggested?
Nonsense, says David MacNaughton, Canada’s Washington ambassador. “We expect to be at the negotiating table with the U.S. again within the next 10 days.”
The Americans and Mexicans have had side negotiations with respect to auto trade. Canada wasn’t needed, the envoy says. That doesn’t constitute a rebuff.
The bargaining with Mexico should wrap up shortly. Then Ottawa and Washington get back at it for what Mr. MacNaughton hopes is the final sprint.
But is there reason for optimism? Ottawa hasn’t been compromising enough in order to get a deal, American negotiators gripe. But that could change. Ottawa is prepared to modify its supply management system governing dairy products. That’s a key Washington demand. It wants the supply management system to be scrapped in its entirety. That’s not going to happen. But a paring down of it – Canadian negotiators won’t specify what the proposed changes are – may move things along.
In order to get a deal, Ottawa has to give Donald Trump something he can interpret as a big win. Canadian negotiators believe a new agreement on auto trade, which the two sides are close to hatching, has enough benefits to fit that bill. It’s a heck of a lot more, they say, than Mr. Trump got out of the tentative deal he agreed to with the European Union.
But Ottawa is not budging on its opposition to the U.S. demand for a sunset clause on a new agreement. While there are very good reasons for not wanting such a clause, is it really important enough to constitute a dealbreaker? The same can be said for Ottawa’s insistence on a dispute settlement mechanism. It’s a form of arbitration that hasn’t worked well under the existing NAFTA. Why should it be a dealbreaker on a new NAFTA?
The fact that the European Union was able to come to such a quick understanding last month with Mr. Trump raised questions about why Canada can’t do the same. But the EU deal was much ado about very little, say Ottawa negotiators. It was just hype by Larry Kudlow, Mr. Trump’s top economic adviser, they say. There was no trade deal as such on agriculture, only a pledge by the EU to buy more soybeans from Americans.
But the fact that Mr. Trump reached the understanding was a refreshing departure from his protectionist talk and threats of auto tariffs. It showed he is less inclined to go the scorched earth route on a trade war.
Though nothing is certain with a president so volatile, fears that he will impose crippling auto tariffs on Canada have abated somewhat. One reason is that the bilateral auto sector agreement is within sight. Another is the tentative EU accord.
If, as expected, negotiations with Ottawa get going again in a week or so, there is still hope that a final new NAFTA deal can be reached by the fall. If a pact is agreed upon, there is no chance it can go to Congress for formal approval before the midterm elections in November. The midterms could see the Democrats take control of the House of Representatives or the Senate, but that need not hurt the prospect of Congressional ratification of a new accord.
With Mexico and the U.S. meeting separately, fears have arisen that they might come to terms on a separate bilateral pact. Mr. Trump has said such side deals might be preferable to a tripartite one, but Ottawa is getting no indication that Mexico is interested in a two-way deal.
Foreign Minister Chrystia Freeland has been in touch with U.S. Trade Representative Bob Lighthizer. She told him she was available in Mexico if needed. Because the talks were on specific Mexican matters, Mr. Lighthizer said not as yet.
That’s what created the impression in some quarters of a snub, of a new chill between the two sides.
There’s no new chill. Just the old one.