Freeland says landing a renegotiated NAFTA deal was always going to come down to the wire

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Foreign Affairs Minister Chrystia Freeland said that if it was ever going to be possible to renegotiate the North American Free Trade Agreement she believed a deal would only happen at the last possible moment.

“We had a bit of, we didn’t actually bet on this, but there was a conversation inside the team of when in September it would happen and I think it’s fair for me now to reveal I’ve always thought it would happen on Sunday night,” Freeland told CBC’s The National.

“I always thought it wouldn’t be finally finalized until the 11th hour,” she told host Rosemary Barton.

Freeland said, that despite the challenge ahead of her, and the expected drama to come, that NAFTA — now renamed the U.S.-Mexico-Canada Agreement, USMCA — was a trading relationship that worked, was beneficial to all three partners, and that “economic logic ultimately does prevail”

“So I was really, really, ultimately, in my heart, serene about the outcome,” she said.

There were two key moments along the way that signaled to Freeland a deal was not only possible, but likely. The first, she said, came when the U.S. backed down from its opening position on the rules of origin for the auto industry.

“The Americans had started off demanding 50 per cent U.S. domestic content in cars and car parts. That would have been devastating for Canada, and so we just had to say no.”

Freeland talks about when the deal would land.

Foreign Affairs Minister Chrystia Freeland on when she thought the renegotiation of NAFTA would come together for Canada. 0:52

Then U.S. Trade Representative Robert Lighthizer, Freeland’s counterpart, came up with the idea that instead of demanding a certain percentage of the car had to be made by the U.S., it would require a percentage of the car to be manufactured by workers earning high wages.

“So instead of it being the U.S., it would be high-wage labour, which of course includes Canada, and suddenly the U.S. and Canadian interests were aligned and this was a deal that Canada could do” Freeland said.  

Dairy

The second moment when she knew a deal was likely, Freeland said, came in August when she went back to Washington “and it was clear that the car deal had been concluded by the Mexicans and also that the Americans really wanted us to be a part of it.”

“Which also makes sense. This has always been a three-way agreement. The Canadian economic relationship is clearly the most valuable one for the Americans, so it became clear to me in that first week that Ambassador Lighthizer had real goodwill when it came to getting a deal,” she said.

Freeland also spoke about the challenges of both sides coming into the negotiation with red lines they were not prepared to cross. One of those lines was the way Canada ran its dairy sector.

“Canada came in with the position, it was very clear, supported by the entire Parliament, that we wanted to defend our supply management, our supply managed sector,” Freeland said. “And by the way, whether or not Canada has supply management needs to be a decision for Canada and Canadians and not for any other country, so we were clear about that.”

I don’t think any country would like someone to be in their critical trade negotiations that was not tough.– Foreign Affairs Minister Chrystia Freeland

Freeland said the debate over dairy was quite normal for trade negotiations in that the U.S. wanted Canada to open its market in dairy, just as Canada wanted the market opened for cars and car parts.

“What we felt was possible and reasonable was to offer some additional market access,” in the dairy sector, she said. “What we were not prepared to do was to change our system, because that’s our business, not anybody else’s.”

Another red line for Canada was Chapter 19.

“What Chapter 19 does is, it gives us laws and rules that govern our trading relationship with the United States and an independent binational panel that decides who’s right and who’s wrong,” Freeland said.

Freeland talks about dispute resolution and Chapter 19.

Foreign Affairs Minister Chrystia Freeland explains why Chapter 19 was so critical for Canada in the renegotiation of NAFTA. 0:39

“We Canadians understand how close our ties with the United States are, how critical they are, but also that they are big and we are small. And so the way to make that work is to have a set of rules, and have an independent place you can go to figure out who is in the right and who isn’t. Chapter 19 is that,” Freeland said.

While that provision was an irritant for Lighthizer from the outset of negotiations, Freeland said her U.S. counterpart “has come to appreciate its value for Canada and the value it brought to the larger trading relationship.”

Working with Trump

Freeland also addressed a side letter that lays out automotive export restraints, rebuffing any suggestion that Canada is facing quotas. 

“I want to be very, very clear. There are no quotas in [USMCA] on car sales between the U.S. and Canada, there no quotas on car parts when it comes to the side letter on 232 [national security provisions] on cars and car parts,” she said.

“What that side letter does is it gives us some comfort that in the, I believe, frankly, unlikely event that the U.S. were to impose 232 tariffs on cars and car parts, we would have a huge part, actually well over our current level of trade with the U.S., [that] would be guaranteed not to be exposed to those.”

Freeland also touched on U.S. President Donald Trump’s apparent dislike of her, something thrust into the open recently when Trump told reporters in New York: “We’re very unhappy with the negotiations and the negotiating style of Canada. We don’t like their representative very much.” 

While he did not mention Freeland by name, the comment was widely seen as a jab at Freeland.

“I don’t think any country would like someone to be in their critical trade negotiations that was not tough,” she said.

Power & Politics talks to experts about the USMCA:



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