"We're finally starting to converge," U.S. trade rep Lighthizer said, before an change of tone. He slammed Canada's intellectual property rules as "Third World" and went through a laundry list of other alleged Canadian transgressions
WASHINGTON—The United States has confirmed a breakthrough in the NAFTA negotiations unlocking a major irritant involving automobiles, while stressing that a few remaining disagreements need to be settled before a deal is concluded.
A sense of optimism that the unofficial No. 1 issue in the NAFTA talks might be close to resolution lifted the Canadian dollar more than a cent March 21, while the U.S. trade czar confirmed the positive developments on autos.
“We’re finally starting to converge,” Robert Lighthizer said, while delivering a progress report to the U.S. Congress.
“I think we’re in a pretty good place.”
The U.S. is pushing for a deal within weeks. Otherwise, the process risks being punted into 2019. By mid-spring, it will be too late to complete the legal steps that would allow a ratification vote in the U.S. before midterm elections usher in a new Congress.
Lighthizer summarized the state of the talks this way: “I believe that we have made a great deal of progress—but we still have a ways to go. I have urged our trading partners to recognize that time is short if we are to complete a deal in time for consideration by this Congress.”
Prime Minister Justin Trudeau said Wednesday he believes that a deal is “eminently possible.”
“There seems to be a certain momentum around the table now that I certainly take as positive,” he said at a Toronto news conference.
That said, serious irritants remain.
The blunt-spoken Lighthizer minced no words while listing several of them—he referred specifically to Canadian policies on dairy, culture, wine, and intellectual property. Dispute settlement rules and Buy American issues are also sticking points.
There is no shortage of others:
Lighthizer concurred. He said it’s also a problem in other supply-managed sectors, poultry and eggs. He expressed some sympathy for Canada’s challenges in dismantling the system, but he said he hopes to negotiate reforms.
“It’s difficult for them to change their policies in these areas,” Lighthizer said.
“Having said that it’s a very high priority to make changes in the Canadian dairy programs. … I’m hopeful that when we put the final deal together it’s something we will make real headway on.”
Trudeau suggested that will mean a fight: “We’re going to continue to defend supply management, because it works.”
Lighthizer predicted how the final hours of bargaining will unfold: he said the last issues to be sorted out will include sensitive agricultural areas, such as dairy and wine, as well as intellectual property.
But he said he envisions a new NAFTA with 33 chapters—up from the current 22—that benefits every country.
He said his primary goal is to steer back some manufacturing from Mexico, through several means: driving up wages in Mexico, new auto rules and weakening the investor-state protections that allow companies to sue foreign governments under Chapter 11.
“The Canadians, to be honest, have a similar objective,” Lighthizer said.
He said he wants guarantees that Mexican workers will get to vote by secret ballot on collective bargaining agreements. On dispute resolution, he was pressed by 103 Republican lawmakers who released a letter demanding that he maintain the investor-state system.
Lighthizer pushed back.
If an American company wants to move a plant from Texas to Mexico, and is frightened that, for example, socialist Andres Manuel Lopez Obrador might win the presidential election and discriminate against foreign companies, why, Lighthizer asked, should U.S. trade policy help provide reassurance?