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U.S. and Canada Nafta Stalemate

Trade talks between the U.S. and Canada are set to commence this week, as negotiators from the two countries attempt to strike a deal while President Donald Trump threatens tariffs on Canadian auto exports to the U.S.

Top-level negotiations are likely to resume this week in an attempt to come to an agreement for Canada to remain part of the North American Free Trade Agreement (Nafta), after the U.S. and Mexico struck a bilateral deal last month, according to an anonymous Canadian official.

The clock is ticking on an accord that can be ratified before the Mexican President-elect Obrador takes office, with Thursday considered to be the deadline for a handshake deal.

Trump’s administration, already embroiled in a trade dispute with China, plummeting approval ratings, and facing midterm elections, has started to show some flexibility with regards to Canada’s continuing involvement with Nafta, although officials wonder privately whether this new-found flexibility will be enough to secure a deal.

Laura Dawson, Director of the Wilson Center’s Canada Institute said “What has surprised me is looking at the conciliatory position of the U.S. on a lot of issues. They’re closer now than they have been”.

What Does Congress Say?

If the U.S. and Canada fail to strike a deal this week, Trump and Congress will almost certainly clash. Trump has warned that he is willing to proceed with or without Canada; Congress will not allow for anything other than a three-country deal.

Minority Leader Nancy Pelosi, a staunch advocate for Canadian inclusion in any Nafta deal said on Friday, “It should be trilateral. I just don’t think that (a Nafta deal without Canada) is in the interest of this hemisphere to be able to prevail in the global marketplace”.

Stumbling blocks

  • Culture: Canadian P.M. Justin Trudeau does not want U.S. companies to take over Canadian networks, or to have “a flood” of U.S. content on Canadian screens.
  • IP Protection: The U.S. and Mexico agreed a bilateral deal to tougher protections for intellectual property. Canada is uninterested in further crackdowns.
  • Pharma: The U.S. and Mexico have introduced a ten-year patent protection period for biological pharmaceuticals. Canada wants a shorter patent-protection period.
  • Trans-Border Shipping: The U.S. would like Canada to increase the “minimis” level – the value of goods that can be transported across borders without being subject to duty.
  • Dairy: Dairy is Trudeau’s main negotiating weapon. Dairy is not included in the current Nafta deal. However, the U.S. wants greater access to Canada’s protected dairy market, and Trudeau is willing to negotiate.

 

Disclaimer:
This article is for educational and informative purposes only and should not be considered as investment or trading advice.

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