The seventh round of the NAFTA negotiations are taking place this week in Mexico City. U.S. Trade Representative Robert Lighthizer, House Ways and Means Committee Chairman Kevin Brady (R-TX) and a delegation of lawmakers will meet with high-ranking Mexican and Canadian trade officials for NAFTA 2.0 discussions.
The official agenda shows negotiators will be spending this round focusing on regulatory best practices and financial services. The round is expected to complete several less contentious chapters, such as e-commerce, telecommunications, and sanitary standards for agricultural products, with those talks scheduled for the second half of the round.
Officials do not however, expect considerable progress to be made on agriculture, labor, and dispute settlement issues. Discussions related to automotive rules of origin are being rescheduled as the U.S negotiator in the policy area was called back for meetings with the Big Three automakers – Ford, General Motors, and Fiat Chrysler who generally disagree with the administration’s approach.
SAF expressed concern last summer that no action be taken that could disrupt the efficient and rapid flow of floral products between Canada, Mexico and the United States.
SAF encouraged the U.S. Trade Representative to maintain existing border inspection procedures, ensure adequate funding exists for inspection agencies and strengthen procedures to rapidly respond to potentially adverse pest or disease detections should they occur.
Timing is very important to the success of NAFTA 2.0. The negotiators continue to reference the goal of wrapping up talks before Mexico’s July presidential elections. Mexican President Enrique Pena Nieto has been optimistic about the NAFTA deal. However, the Mexican President is ineligible to run for reelection next year and front-runner Andres Manuel Lopez Obrador has sent mixed messages about how he would address NAFTA.
Meanwhile, President Trump continues to threaten withdrawal from the agreement. U.S. midterm congressional elections in November and the need for the Administration to renew Trade Promotion Authority also add another level of complications and urgency.
The Trump administration has proposed many changes to the agreement, a few of which are particularly contentious. One proposal would allow the U.S. to opt out of investor-state dispute settlement provisions (ISDS) in NAFTA 2.0 which sets up ad hoc tribunals under which corporations can seek monetary damages for perceived government violations of the agreement’s investment rules.
Canada continues to stand behind the need for these provisions.
Several U.S. business and industry groups and members of Congress have strongly expressed that their support for the NAFTA 2.0 depends on the inclusion of ISDS.
Another proposal would result in NAFTA sunsetting every five years. If this provision is included in NAFTA 2.0, the agreement would terminate after five years unless the parties renew it. U.S. officials presented this as a “systematic re-examination” of the agreement.
These provisions, in addition to those framing automotive rules of origin, have caused certain roadblocks in talks between the three nations.
State governors are busy highlighting the benefits of trade agreements to local economies. The theme of last week’s Winter meeting of the National Governors Association was “International Cooperation” highlighting cross-country ties between the States and the international community. Press statements from the meeting echoed unified support for NAFTA, in particular.
The U.S. is expected to host the next round of NAFTA talks in late March or early April.
