Nafta Partners Tout Progress and Downplay Effect of Trump Threat

(Bloomberg) 

Trade negotiators from the U.S., Canada and Mexico praised the work of their teams in the first weeks of talks on the North American Free Trade Agreement, sidestepping President Donald Trump’s threats to pull out of the deal.

U.S. Trade Representative Robert Lighthizer, Mexican Economy Minister Ildefonso Guajardo and Canadian Foreign Minister Chrystia Freeland held a joint statement in Mexico City on Tuesday as the second round of talks concluded, highlighting their progress and shared commitment to finish talks this year.

The trio insisted they’ve made headway and now have a deeper understanding of each other’s demands. Though striking a more upbeat tone than he did at the start of talks in Washington last month, Lighthizer still stressed a new deal must benefit “all Americans,” including those in manufacturing who lost their jobs as a result of Nafta.

“We feel like we’ve done as much as you could hope to do in two rounds,” he said. “I expect when I finish this agreement that the president will be supportive of it, because I’m not going to agree to things that he’s not supportive of.”

The three nations will need to keep talks racing ahead if they want to secure a deal by their target of year-end, a goal they reaffirmed on Tuesday. The third round is scheduled to take place Sept. 23-27 in Ottawa. Guajardo said he expects seven rounds of talks in all this year.

Difficult Subjects

On several issues, negotiators in Mexico City consolidated their proposals into a single document, which teams will work from in subsequent rounds, the countries said in a joint statement.

Some policy proposals from the U.S. have not yet been submitted, officials familiar with talks said during the five-day session in Mexico City. Freeland alluded to that, saying that the U.S. and Mexico “have been tabling text as well” but that Canada had provided all the text it said it would.

“The Washington round was about setting the table,” Freeland told reporters. “This round was about really digging in deeply in detail and understanding the positions of our counter-parties.”

Speaking to reporters after the trilateral message, Lighthizer downplayed the impact of Trump’s threats on negotiations. Both Barack Obama and Hillary Clinton promised during the 2008 presidential campaign to improve Nafta or withdraw, he said, adding such a stance “is not a crazy position to take.”

“We have an important job to do, and it’s really important to working people,” Lighthizer said. “I never have a conversation with the president where he doesn’t make that point.”

Both Freeland and Lighthizer dismissed concerns that the negotiations aren’t proceeding fast enough. “We are 20 days into this negotiation. That is very important to bear in mind,” Freeland said, while Lighthizer said negotiations are advancing at “warp speed.”

Sticking Points

Lighthizer said Nafta negotiators tabled text for more than two dozen chapters that “represent a new modern agreement which once concluded will support robust economic growth in North America for decades to come.”

Guajardo later told reporters the parties had made progress on the topics of small- and medium-size businesses and telecommunications, but they haven’t yet dealt with difficult subjects like rules of origin and trade deficits. One of the thorniest areas will be around Chapter 19, bilateral panels that consider complaints about illegal subsidies and dumping, said Guajardo. The U.S. wants the Chapter 19 provision eliminated from the pact.

The parties also aren’t on the same page about “intervening” in labor markets, Guajardo said. American and Canadian negotiators want Mexico to ensure better conditions for its workers, a move that could help raise salaries and reduce the incentive for manufacturers to move jobs south of the border.

There are no substantive differences on energy but the countries are discussing whether an energy-specific Nafta chapter is needed.

The trio of top officials had dinner Monday night before a trilateral meeting Tuesday, with Freeland hailing the working relationship. “Bob, Ildefonso and I at the political level are developing a very good personal relationship,” Freeland said.

The talks set a “strong foundation” for the next round, she said. “We are running fast for the end of the year.”