U.S. goes hard on Requirements, soft on Particulars in NAFTA talks


American negotiators are insisting Canada and Mexico will need to make all the concessions at the overhaul of the North American free-trade arrangement while the United States will not give up anything, The Globe and Mail has learned.

A source familiar with the closed-door talks at the Hyatt Regency hotel in Mexico City, where the next round of the NAFTA renegotiation is unfolding, said the Trump government has taken a hard line at the bargaining table.

The U.S. choice to dig in at this early stage of discussions means there’ll be little speedy advancement, despite a packed schedule and compressed time period: Negotiators are working on 25 unique areas of the arrangement, and the United States is pushing to have a deal done before the end of the year.

The United States ratcheted up the tension even further on Saturday by demanding that Canada loosen its method of supply management for dairy, poultry and eggs, said the source, who spoke on condition of anonymity to be able to reveal private details of their talks.

This round of talks, which started Friday, wrap up Tuesday. According to a schedule obtained by the planet, the last day of talks will include another day of discussions on the principles of origin.

The rules of origin govern how much material in manufactured goods must be produced within the NAFTA zone to be exported between the three countries without paying tariffs. Negotiators will also discuss environment and government procurement, a topic that could contain controversial Buy American provisions.

Foreign Minister Chrystia Freeland came in Mexico City Monday and had dinner with her counterparts — U.S. Trade Representative Robert Lighthizer and Mexican Economy Minister Ildefonso Guajardo — until a series of meetings they will hold Tuesday. Two senior consultants from each country also attended the dinner.

The next round of talks will begin later this month in Ottawa; future rounds will keep on rotating between the three nations.

Despite the United States’ tough stand, the nation failed to provide its negotiating partners many details on what it needs, industry and government sources said.

Washington hasn’t, for example, said precisely what it needs Canada to perform with supply management, whether to loosen the rules or devote a larger quota for U.S. farmers.

It was a similar story on the rules of origin. America signalled in the opening round of discussions last month that it might require more NAFTA-zone articles in autos — and a quota of especially U.S.-made content — but hasn’t yet given Canada and Mexico the specifics on what would be, the sources said.

One industry source said the United States’ prime critical on rules of origin seems to be helping the national steel market. Nevertheless, the American government is still trying to determine how exactly to rejig the rules of origin to make that happen.

Canada’s apparent strategy is to make massive demands — such as that climate change has been written to the deal and the Unites States prohibits states from adopting so-called “right-to-work” legislation accused of gutting marriages — knowing they will probably be dialled back within their give-and-take. Mexico, meanwhile, is tabling few comprehensive requirements, two sources said, waiting for the United States to disclose its rankings before reacting.

Armando Ortega, a former Mexican trade negotiator, said the United States’ intransigence is odd at the first stage of talks: Regular negotiations usually start with all sides putting their best foot forward and attempting to achieve common objectives. The difficult American bear, he said, could be politically motivated posturing. President Donald Trump won last year’s election largely by attacking Mexico on trade and border safety.

“If you’re Lighthizer, you will need to play to your audience. Your boss being who it is, you’d like to be very tough, especially if you’re in the country which was your pinata,” he explained in an interview.

Mr. Ortega, president of the Canadian Chamber of Commerce in Mexico, said it’s ironic that the United States — that demanded the discussions and wants them done at the end of the year — has not laid out all of the details of its requirements.

“They are the demandeur, they need to be putting things on the table,” he said.

Flavio Volpe, president of Canada’s Automotive Parts Manufacturers’ Association, stated rules of origin are the primary issue for the United States in discussions since they’ll give it something easy to return to its supporters.

He said he thought the United States is still trying to sort out how much North American material the domestic sector could realistically create to determine what it can request without unintentionally driving production outside the NAFTA zone.

“That amount is the most readily examined achievement or failure point for the U.S. administration. So I think we will not find a good number until much later in the procedure,” Mr. Volpe told The planet in the lobby of the Hyatt.

Mr. Volpe said the United States’ hard line in the opening of the discussions was probably an “on the second tactic,” and does not indicate the discussions are doomed.

“The waters will boil some times more than others,” he said. “But it is just language.”

Courtesy: The Globe And Mail

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