Trade Officials Make Progress at Latest Nafta Talks, but Uncertainty Remains

The third round of talks to renegotiate the North American Free Trade Agreement came to an end Wednesday amid growing pessimism that the U.S. and its counterparts remained far apart on important issues such has how to resolve trade disputes, even as some progress was made on rules for small businesses and financial services.

At a closing event featuring statements from senior officials of the three Nafta countries, they applauded the progress to date, including the conclusion of a chapter addressing small and medium-size businesses. They said they were also close to a finalizing text on a chapter on competition policy.

“Of course there is enormous amount of work to be done, including on some difficult and contentious issues,” said U.S. Trade Representative Robert Lighthizer in his statement. “We continue to push for ways to reduce the U.S. trade deficit, and are committed to a substantial renegotiation that reinvigorates U.S. industry and reciprocal market access” for U.S. farmers, ranchers and firms.

Adding tension to the final hours of talks in the Canadian capital was a decision from the International Trade Commission that slapped a preliminary 220% tariff on planes made by Bombardier Inc., one of Canada’s biggest industrial companies. The U.S. trade authority ruled in favor of a complaint from Boeing Co., which alleged Bombardier unfairly benefited from state subsidies — allowing the Montreal company to sell its 100-seat CSeries jets at a deep discount.

Senior politicians in Canada warned of consequences for Boeing, and called on Prime Minister Justin Trudeau to respond forcefully.

“Boeing may have won a battle, but the war is far from over and that we shall win,” said Philippe Couillard, premier of Quebec, Bombardier’s home base. He urged Mr. Trudeau to take “a very hard line” against Boeing. “Not a bolt, not a part, not a plane from Boeing should enter Canada until this is resolved in a satisfactory way.”

The U.S. trade agency’s ruling against Bombardier is likely to strengthen Canada’s resolve to maintain dispute-settlement provisions that are presently in Nafta but the Trump administration wants scrapped claiming they pose a threat to U.S. sovereignty.

“Canada will now be more determined than ever to keep” the arbitration panels in Nafta, said Peter Clark, an Ottawa-based trade strategist and former Canadian trade official. He said it’s his view Canadian negotiators are prepared to walk away from the Nafta talks over dispute-settlement mechanisms — in particular Chapter 19, which would allow a firm like Bombardier to challenge tariffs imposed by Washington before an independent panel.

Three people familiar with the talks also said there was deep concern about a proposal tabled by the U.S. on so-called seasonal safeguards for agriculture, which would block Mexican produce imports during certain times of the year.

The U.S. stance on issues such as Chapter 19 and agriculture “are a pretty radical departure from the past and there is a growing worry that [negotiators] might not actually come out of this with a deal,” said Eric Miller, a global fellow at the Woodrow Wilson Center’s Canada Institute who focuses on trade.

After this round in Ottawa, Nafta talks will recommence in the D.C. area next month.

Mr. Clark said the Nafta rounds to date have lacked any sort of momentum, and attributed that to the Trump administration’s inability to get a consensus from Congress, the business community and other stakeholders on ways to improve Nafta. “If they can’t sell it at home, then they definitely can’t sell it here,” said Mr. Clark, who’s attended all three rounds of Nafta renegotiations.
Source: Dow Jones