In what is turning out to be one of the most contentious trade disputes between the three countries in many years, Canada and Mexico rejected U.S. demands that were put forward for the North American Free Trade Agreement (NAFTA), imperiling the trade deal and potentially carrying with it massive economic fallout.
U.S. Trade Representative Robert Lighthizer, Mexican Economy Minister Ildefonso Guajardo, and Canadian Foreign Minister Chrystia Freeland will meet in Washington and speak at a press conference together in the afternoon at the end of the fourth round of talks.
The talks do not seem to have brought the three countries any closer to an agreement, as the U.S. has put forward several contentious policy changes that both Canada and Mexico have publicly turned away.
One of the more controversial proposals that the U.S. has tried to implement includes a “sunset clause” that would allow for a reevaluation of NAFTA every five years, with a mandatory ratification by all three members or the treaty ceases. U.S. demands on auto manufacturing and dairy have also put off Mexican and Canadian negotiators. Perhaps most problematic for the U.S.’ neighbors are the dispute panels, with the U.S. wanting their power limited in their abilities to settle trade disagreements.
President Donald Trump made trade deal renegotiation a fixture of his campaign, often commenting on how he believed that the U.S. was being taken advantage of in these deals. As such, he’s commented regularly that he is willing to kill NAFTA entirely and has threatened to walk away from negotiations at any time, making the negotiation process that much more tense.
If NAFTA were to be canceled, many of the jobs that take advantage of the treaty may be at risk, while certain industries would need to enter a restructuring period in order to cope with the economic fallout. While a deal may end up taking NAFTA’s place, the heavy amount of trade between the three nations means that a repeal of the deal would impact many industries across the three countries.
The next round of talks, the fifth round so far, is set to resume in November in Mexico.
“Mexico and Canada Reject U.S. Nafta Demands,” Bloomberg, October 17, 2017.