OTTAWA—Trade insiders say a token win on NAFTA may soon be possible—but the substantive work is nowhere near complete.
A report by Bloomberg this week said the White House wants leaders from Canada and Mexico to announce the broad outlines of an updated North American Free Trade Agreement during next week’s Summit of the Americas in Peru.
But experts insist any agreement in principle that soon would be little more than a symbolic move because the hardest part of the negotiations has yet to really get underway.
“I would be very skeptical about any substantive deal that could be announced next week,” said Laura Dawson, director of the Canada Institute at Washington’s Wilson Center.
“I understand that the U.S. would like to be able to make an announcement, but the level of progress on major issues just doesn’t warrant being able to claim victory in many areas.”
From her discussions with NAFTA negotiators, Dawson said she’s heard rumblings of an “early-harvest announcement.”
She said such an announcement, however, would likely only cover about seven of roughly 30 negotiating areas. Those seven areas, she added, are already closed or nearly closed—and none are considered substantive.
“So, all the hard work is still down the road,” said Dawson, who believes the highly complex NAFTA negotiations could continue for another year.
The uncertainty of key upcoming dates on the political calendar is putting pressure on the three countries to complete a deal by June in order to allow ratification votes in 2018—before the current Mexican government leaves office and before the midterms potentially reconfigure the U.S. Congress.
The Trump administration fears a failure to strike a deal within several weeks would drag talks into 2019 and into a more uncertain political environment.
Foreign Affairs Minister Chrystia Freeland is expected to travel to Washington later this week for NAFTA discussions that will include a meeting with U.S. Trade Representative Robert Lighthizer.
Freeland has acknowledged the pressure from looming votes in the U.S. and Mexico. She said last week that Canada has been engaging on NAFTA “very intensively” and is prepared to work on it “24/7.”
On Tuesday, Mexico’s chief negotiator, Kenneth Smith Ramos, wrote on Twitter that NAFTA talks were entering a phase of “intensive” ministerial engagement.
Last week, Lighthizer said in a TV interview that on NAFTA he was “optimistic we can get something done, in principle, in the next little bit.”
That same day, Canada’s chief NAFTA negotiator said the U.S. needed to show more flexibility toward resolving “core” issues if it expected to reach an agreement sometime this spring.
Steve Verheul noted there was a range of chapters “where we’re not that far apart,” but on the most important issues, he said there was still significant work ahead.
U.S. trade expert Dan Ujczo said he’s heard a “handshake” deal could be announced as early as mid-April as a way to calm market movements and political rhetoric surrounding NAFTA, particularly with U.S. and Mexican elections on the horizon.
“An ‘agreement in principle’ is the only way to get a political win at this stage,” Ujczo, a trade lawyer at Dickinson Wright, wrote in an email.
“It provides cover to everyone to proclaim victory while still leaving the window open for people unhappy with the proposed deal to make changes.”
He said a full agreement would be problematic at this point anyway because it would turn the deal into an election issue.
“Best now to turn down the temperature and let NAFTA simmer through 2018,” Ujczo said.
Dawson said she can see the political appeal on all sides for an preliminary announcement.
She said the Trump administration could argue it’s getting the deal done, one that’s better for Americans, while Canada and Mexico would get a buy-in on NAFTA from a U.S. president who has repeatedly threatened to rip up the agreement.
—with files from Alexander Panetta in Washington