Canada returns to the NAFTA table in Washington Wednesday after a four-day break in negotiations that appeared to be pretty stressful … for the American side.
The Trump administration’s failure to secure a deal before last Friday wasn’t well-received by key voices in Congress, where NAFTA’s fate ultimately will be decided.
By the end of the weekend, the White House seemed to have fallen out with an ally it had hoped would back a revised NAFTA: a union representing millions of working-class Americans, now souring on President Donald Trump’s ability to deliver.
As talks resume, the priority to-do list sits right where it was on Friday afternoon:
- Update NAFTA’s dispute settlement chapters in ways that are both consistent and comfortable for all three partners;
- Bridge the gap between what Donald Trump wants and what Canada is prepared to give from the supply-managed agriculture sectors;
- Address nagging Canadian concerns about protections for cultural industries;
- Figure out how many of the concessions Mexico made to the U.S. on intellectual property are also acceptable to Canada.
Fresh signs of perceived weakness in Washington may bolster Canada’s determination to reject a bad deal, as Prime Minister Justin Trudeau has vowed publicly to do. Trudeau’s team spent the weekend talking to stakeholders and advisers to prepare for this week.
The tone Foreign Affairs Minister Chrystia Freeland set early in her public statements during the negotiations — a no-drama approach of working “intensely” and “constructively” and praising the “goodwill” of counterparts — seems to be holding firm.
Work continues to finalize the text before the next Congressional deadline at the end of the month. If all three parties remain serious about a signing ceremony before Mexico’s government changes hands Dec.1, the negotiated text is due by Sept. 30.
Congress is the ‘final arbiter’
The pressure on the negotiating teams continues. But since Friday’s notification to Congress leaves the door open to a trilateral agreement, all sides have several weeks to work deliberately through the sticking points.
At the moment, the Americans may be facing more heat than those on the Canadian side. Trudeau’s government won’t face voters for a year, while Republicans are staring down a particularly difficult midterms season.
During a late Friday briefing by U.S. officials, a reporter pressed for details on why the U.S. Trade Representative’s office believed Congress could approve a deal without Canada — essentially failing to deliver the kind of trilateral agreement Congress authorized the USTR to renegotiate.
Officials said that, in the USTR’s view, it should be possible to drop a country from a multilateral negotiation if its demands can’t be met.
However, the official acknowledged that Congress is the final arbiter of how (and if) trade deals get passed.
That didn’t stop Trump from warning Congress “not to interfere” in the negotiations, part of a series of tweets issued Saturday morning as the late Senator John McCain’s funeral unfolded — an event to which Trump was not invited.
There is no political necessity to keep Canada in the new NAFTA deal. If we don’t make a fair deal for the U.S. after decades of abuse, Canada will be out. Congress should not interfere w/ these negotiations or I will simply terminate NAFTA entirely & we will be far better off…
Rosa DeLauro, a congresswoman key to mobilizing Democratic voices against trade agreements like the Trans-Pacific Partnership, said in a statement late Friday that “Canada must be a party to the final deal. A deal between the United States and Mexico is not good enough.”
Rep. Richard Neal, who could assume the chair of the powerful House Ways and Means committee if Democrats win control of the House in November, said the outcome of the last year of NAFTA negotiations had amounted to “little more than re-arranging the deck chairs on the Titanic.”
Representatives of Trump’s own party are also concerned about the way things are going.
Republican senators like Pat Toomey continue to warn the Trump administration to not attempt to use the trade authority delegated to it for a deal unless it includes Canada.
Automotive math requires three countries
Bipartisan legislation stands at the ready to limit Trump’s trade powers should he try to go beyond what a critical mass of Congress is comfortable with — by imposing national security tariffs on automobiles, for example, or by issuing an executive order to withdraw from NAFTA altogether.
U.S. President Donald Trump was out of town at a fundraiser late Friday when Congress was notified of the U.S. Trade Representative’s intention to sign a trade agreement with Mexico – and Canada, if it is willing – in 90 days. That letter started a new, 30-day countdown until the text of a trade agreement must be agreed between the three countries. (Chris Wattie/Reuters)
Trump’s Commerce Secretary Wilbur Ross confirmed a week ago it’s most likely that the next Congress — the one set to be elected in November’s midterm elections — will be the one to vote on NAFTA’s rewrite, not the current mix of legislators.
So U.S. Trade Representative Robert Lighthizer has to not only come up with a deal that his boss wants (no easy task) but one a hypothetical future mix of Democrats and Republicans could support.
Analysts noted over the weekend that the automotive chapter breakthrough previewed in Monday’s preliminary agreement with Mexico is premised on preserving supply chains across three countries, not two.
The math for the new rules of origin may not work without Canada. For the Canadian side, that’s leverage.
Hurt outpacing help for workers, says union
On Fox News Sunday (a television program prone to flattering coverage of the Trump administration), Richard Trumka, the head of the American Federation of Labour and Congress of Industrial Organizations (AFL–CIO), said the supply chains across Mexico and Canada are so integrated that it’s pretty hard to see how NAFTA could be replaced by a deal that doesn’t include Canada.
Trumka said his federation — which represents over 12.5 million working class Americans, including those in manufacturing-heavy districts that Republicans need to succeed — is anxious to move forward with an agreement that includes all three countries.
Trumka pointed out that, while the Trump administration has so far failed to land a three-nation deal, it continues to pursue a high-tariff trade strategy which is hiking the price of both intermediate components and final consumer goods, triggering layoffs.
“Unfortunately, to date, the things that [Trump] has done to hurt workers outpace what he’s done to help workers,” he said.
Undeterred, Trump tweeted on Labour Day Monday that Trumka “represented his union poorly on television” and workers in America were doing “better than ever before.”
Richard Trumka, the head of the AFL-CIO, represented his union poorly on television this weekend. Some of the things he said were so against the working men and women of our country, and the success of the U.S. itself, that it is easy to see why unions are doing so poorly. A Dem!
Behind the scenes, Trump cancelled a scheduled outing and spent his Labour Day making phone calls that were about trade, according to White House spokesperson Sarah Huckabee Sanders.
So who took the president’s calls? It’s unclear. It doesn’t seem in his nature to ask for help — but he may need it.