Mexican President Says He’s ‘Optimistic’ About NAFTA Deal

The next round of talks on reworking the 24-year-old trade agreement is due to take place in Montreal later this month.


Mexican President Enrique Pena Nieto said on Thursday he is optimistic that the United States, Mexico and Canada can successfully renegotiate the North American Free Trade Agreement (NAFTA) to the mutual benefit of the three countries.

“I have said so before, I am optimistic about the possibility of getting a deal which benefits the three member states,” Pena Nieto said during a speech in Mexico City, Reuters reports.

The next round of talks on reworking the 24-year-old trade agreement is due to take place in Montreal later this month.

Mexico had previously hinted it would exit NAFTA hours after Canadian officials claimed the US will most likely pull out of the agreement. The comments made Wednesday sparked fear in international markets and a devaluation of both the Canadian dollar and the Mexican peso.

Two government officials told Reuters earlier in the day that Canada is increasingly convinced that US President Donald Trump will soon announce that Washington is pulling out of the trade agreement.

Three Mexican sources, who know about the negotiations, then claimed Mexico would exit NAFTA if Trump decided to trigger the six-month process to withdraw from the pact. Initiating the withdrawal process would not be binding for the United States and such a move would need Congress approval.

One of the sources, Raul Urteaga, the head of international trade for the ministry of agriculture, said: “If Trump announces a US withdrawal from NAFTA, well at that moment the negotiations stop.”

The penultimate round of the NAFTA negotiations is due to be held in Montreal, Canada, between January 23 and 28.

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Dairy Farmer to Donald Trump: “Replace NAFTA, It’s Not Good For Farmers Anywhere”

There is a lot of angst in the U.S. corporate world. They are quite concerned that the renegotiation talks between the United States, Canada and Mexico (the three participants in the North American Free Trade Agreement, or NAFTA) may not deliver a new agreement that is as lucrative as the old NAFTA


NAFTA has been in place since 1994. It is one of those classic neoliberal trade deals that essayist George Scialabba describes as “investor rights agreements masquerading as ‘free trade’ and constraining the rights of governments to protect their own workers, environments, and currencies.” As such, it has served corporate interests well.

U.S. corporations counted on NAFTA and other trade agreements to keep wages low by the threat of, or actual movement of, manufacturing jobs to wherever it was easiest to exploit workers and the environment.

A renegotiated NAFTA, would, if U.S. negotiating positions were accepted, force Canada to scrap the price protections that give their dairy farmers a fair price for their milk. In Mexico, U.S. corporate interests would hope to prevent Andrés Manuel López Obrador, if elected president, from trying to bring Mexican farmers out of poverty. Obrador calls for expanding the country’s dairy industry and rebuilding its native corn production. (American agribusiness destroyed Mexican family farm corn production by dumping cheaper corn on the Mexican market—hence the spike in illegal emigration to the United States after NAFTA went into force.)

Protectionist policies on the part of Canada and Mexico? Yes, but what is the function of government if not to protect its citizens? Trump says “America first” but it goes both ways. Presumably, our government was not founded with the intent of protecting corporate interests. In fact, as Thomas Jefferson noted:

“The end of our democracy … will occur when government falls into the hands of lending institutions and moneyed incorporations.”

Looks like we’re there.

If farmers, union members and small businesses were the intended beneficiaries of free trade agreements we should all be doing quite well financially. Dairy farmers should be getting a fair price for their milk, workers should be earning a living wage and small businesses should be lining the main streets of America again—but we know that is not the case.

Multinational corporations, the real beneficiaries of free trade agreements, write the rules, stash their profits in offshore tax havens, all while they cleverly tout the agreements as being in the best interests of the farmer and wage earner.

As a dairy farmer I am told trade agreements have and will continue to help me “compete globally.” Through NAFTA we can increase our sales of dairy products to Mexico and crack Canada’s protection of their farmers’ milk price. Notice they do not say this will increase our profitability, only our sales—so why should I want to produce more, sell more, when there is no profit? It only means farmers will need to work harder to make the same or less, at the expense of Canadian and Mexican farmers.

Of course, that is not the concern of the “dairy industry.” Their profit is ensured by the willingness of farmers to produce more and never question why they cannot get a fair price. If dumping our cheap corn on Mexico or putting Canadian dairy farmers out of business is the price of increasing corporate profit—so be it.

President Trump promised to make NAFTA better or pull out. What he and his administration would define as better is a very loaded question. I have seen little in the past year to indicate the administration wants to do anything to raise farm prices or wages, or curb the influence of corporate interests on government. Just look at the new tax bill—let the good times roll for the rich and the corporations!

Wisconsin Assembly Speaker Robin Voss is wrong when he says “NAFTA has worked for Wisconsin. It’s not the time to put new obstacles in place that would hurt the very markets that our business owners and farmers depend on.” If NAFTA has worked, why are farmers being told to expect continued low prices in 2018?

So, rather than more of the empty populist rhetoric that fueled his campaign and election, the president, for once, actually needs to follow through on a promise: NAFTA should be replaced not renegotiated.

As Public Citizen’s Global Trade Watch noted, “Trump launched the promised NAFTA renegotiation in August, but U.S. corporate interests have persuaded Canada and Mexico to not engage on U.S. proposals to transform NAFTA in ways that U.S. unions, small businesses and consumer groups have long argued would slow job outsourcing and downward pressure on U.S. wages.”

Anyone who supports the continuation of NAFTA without questioning who actually benefits really has no concern for the best interests of farmers or workers in the United States, Canada or Mexico.

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NAFTA to Collapse As Trump’s Bullying Tactics Yield No Results

The penultimate round of NAFTA negotiations will be held in Montreal, Canada between Jan. 23-28.


Mexico announced it would exit the North American Free Trade Agreement, known as NAFTA, just hours after Canadian officials claimed the U.S. will most likely pull out of the agreement. The comments made Wednesday have sparked fear in international markets and a devaluation of both the Canadian dollar and the Mexican peso.

Two government officials told Reuters earlier in the day that Canada is increasingly convinced that United States President Donald Trump will soon announce that Washington is pulling out of the trade agreement.

Few hours later three Mexican sources, who know about the negotiations, claimed Mexico would exit NAFTA if Trump decided to trigger the 6-month process to withdraw from the pact. Initiating the withdrawal process would not be binding for the U.S. and such a move would need Congress approval.

One of the sources, Raul Urteaga, the head of international trade for the ministry of agriculture, said “if Trump announces a U.S. withdrawal from NAFTA, well at that moment the negotiations stop.” The announcement will complicate attempts by the U.S. to use threats of withdrawal as leverage in the upcoming, and penultimate round of the NAFTA negotiations to be held in Montreal, Canada between Jan. 23-28.

Trump’s threats and demands have garnered criticism by many analysts who have accused him of attempting to bully Mexico and Canada.

The three countries agreed in July to hold seven rounds to renegotiate NAFTA, however not much progress has been made on key issues.

Among them: the U.S. attempt to establish a minimum limit of U.S. content for automobiles, a clause that would automatically terminate the agreement if it is not renegotiated every five years, and the elimination of the chapter 19 provision in NAFTA’s disputes mechanism, which allows for an alternative binational panel to review domestic courts’ determinations on antidumping and countervailing duty cases.

Other related issues remain as Canada also filed Wednesday a 32-page complaint with the World Trade Organization challenging U.S. investigations on subsidies to Canadian-exported goods, such as dairy products and lumber wood. In early 2017 the Trump administration imposed tariffs on these Canadian goods.

The NAFTA has faced increasing criticism by Trump, who has called it the “worst trade deal in the history of the world” and repeatedly vowed to pull out of it during his campaign.

However the U.S. president’s view on the pact is not shared by his country’s Chamber of Commerce CEO,Tom Donohue who had warned that pulling out of NAFTA would be a “mistake” and would mean an “absolute destruction […] to economic growth.”

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Supply Chain News: Whirlpool Wins Major Ruling Against Imports in Rarely Used Filing – will Others Follow Suit?

Solar Panel Makers also Likely to Get Tariffs on Imports, as Protectionism Might get Real


Whirlpool Corporation – parent of its namesake brand as well as Maytag, Amana and several others, won a major victory against foreign imports of appliances in a federal trade complaint, which may or may not have a big impact US trade policies going forward.

Whirlpool’s targets are two South Korean firms, Samsung and LG, which in recent years have grown to become global giants in the appliance business – and taking US share away from Whirlpool with imported products.

In an earlier case, Whirlpool was able to get the US federal government to rule that Samsung and LG were dumping washing machines made in Korea and Mexico into the United States at below fair-market prices, making then subject to country-specific import tariffs. But the victory was a temporary one: LG and Samsung avoided those tariffs by switching production to China and later to Vietnam and Thailand.

Perhaps emboldened by an incoming Trump administration and the president’s tough campaign talk on trade, earlier this year Whirlpool filed a new action with the US International Trade Commission under the seldom used “global safeguard” complaint, which doesn’t require that Whirlpool show it was hurt by some type of unfair competition. Instead, the requirement was that Whirpool simply show that a surge of imports have seriously damaged it. These safeguards are generally meant to provide temporary relief for the domestic industry to adjust.

As largely expected, the ITC ruled last week in Whirlpool’s favor. The 4-to-0 vote by the commission means that the over the next two months, the commission will consider specific protectionist measures such as duties and tariffs to recommend for President Trump’s approval.

Could Whirlpool’s victory kick-off a trend that sees other US manufacturers seek similar general trade relief? And iIn the Whirlpool case and potentially others, what will be the trade response, either from impacted countries and/or likely almost certain actions against any such US protectionism at the World Trade Organization.

It is worth noting that the ITC also ruled in September that solar panels were being imported in such quantities as to cause serious harm to domestic panel makers, and it will now determine what duties/tariffs to levy against imports.

But the answer and consequences aren’t always as clear as they might seem at first glance. In one of the last successful “global safeguard” actions taken in 2002, the Bush administration agreed with the US steel industry and imposed steep tariffs on imported steel. Good maybe for domestic steel producers, but by some estimates nearly 200,000 workers in steel-consuming industries lost their jobs as a result. Before long, the tariffs on imported steel were lifted.

The similar ruling on imported solar panels has led some to estimate that restricting imports could threaten tens of thousands of jobs for installers of solar panels and related workers in the US.

And Whirlpool, which operates the highest volume appliance factory in the world near Findlay, OH, where it has brought back some production from Mexico and Germany, may find another avenue of competition from Samsung and LG: both companies say they are preparing to invest hundreds of millions of dollars to open appliance manufacturing facilities on American soil. LG already has broken ground on a 310-acre site in Clarksville, Tenn., and Samsung has acquired an existing facility in Newberry, SC, though some are saying the trade action could somehow scuttle one of both of those plans.

Though at those factories, the South Korean companies would obviously need to pay competitive US wages, far higher than in say Vietnam.

So where do we go from here? The Los Angeles Times last week quoted noted trade attorney Stephen Orava of King & Spalding as saying the Trump administration’s tough stance on trade “is emboldening companies” to bring similar trade actions as that successfully pursued by Whirlpool. 

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Foreign Firms Rush Washers, Solar Panels Into U.S. Amid Trade Fears–Update

Foreign makers of such products as washing machines and solar panels are ramping up shipments to the U.S. ahead of government decisions on whether to erect new barriers,

trade data show.



The influx of goods comes after companies including appliance giant Whirlpool Corp. and solar-panel maker Suniva Inc. asked the Trump administration in recent months to use powers under a controversial trade law that gives the president wide discretion on tariffs and quotas.

The two cases are among the early tests of President Donald Trump’s “America First” trade policy and his pledges to help U.S. manufacturers and factory workers.

Ships brought 9,063 containers’ worth of large residential washers to U.S. ports in November, more than double the previous year’s clip, a month after American regulators sided with Whirlpool in a dispute with South Korean rivals Samsung Electronics Co. and LG Electronics Inc., according to an analysis of customs and U.S. Census Bureau data from research firm Panjiva. Samsung and LG had a combined 35% share of the retail U.S. washer market last year, roughly equal to Whirlpool’s.

Myles Getlan, an attorney for Whirlpool, said recent import levels were a sign that competitors were stockpiling washers. “It has the potential to undermine the effectiveness of any remedy that the president could impose,” he said.

An LG spokesman said the potential for new trade barriers played a role in the company’s increased washer shipments but denied it was stockpiling. He said the company also weighed other factors including increasing demand, shifts in distribution and new retail opportunities. A spokeswoman said Samsung looked forward to “continuing to meet strong consumer demand for our premium washing machines.”

At the increased import rates, as much as six months’ worth of surplus washer inventory could arrive in the U.S. before any tariffs go into effect, Longbow Research analyst David MacGregor said.

It wasn’t clear how the import surge would affect retail prices of washing machines. Analysts predict tariffs on overseas manufacturers’ washers would eventually get passed on to consumers, but Freedonia Group analyst Kyle Peters said additional imports before new trade costs could postpone any price increases.

U.S. import volumes for solar panels and related products also more than doubled, to the equivalent of 12,379 shipping containers in November, compared with the previous year, Panjiva trade data show.

U.S. trade regulators in September agreed with Suniva and SolarWorld Americas Inc., two solar-panel makers with U.S. factories, that the domestic industry had been harmed by imports and later recommended tariffs.

Trade data offer a limited window into companies’ export decisions, which can be influenced by seasonality, demand and trade. But Panjiva trade analyst Christopher Rogers said manufacturers expecting new trade barriers often boost shipments and “there hasn’t been anything put in place saying you can’t do this.”

Their attitude, he said, is: “Let’s get while the getting is good.”

The imports come amid a continuing debate over free trade and protectionism. Opponents of new tariffs and other trade barriers argue they distort open markets and are harmful to consumers, while many U.S.-based companies and workers say they protect domestic industries and jobs. Companies that support additional trade barriers say the rise of imports could undercut new protections they claim they need to fend off harmful foreign competition.

Mr. Trump has until early 2018 deadlines to make decisions on potential trade barriers in the cases involving washers and solar panels as well as two separate ones involving steel and aluminum. After receiving recommendations from trade regulators, the president has wide latitude to decide whether to impose restrictions and what type.

Whirlpool, the Michigan-based appliance company, and solar-panel makers with U.S. factories are seeking protection under a 1970s-era provision known as the safeguard law, claiming their businesses have suffered serious injury from imports, not from unfair trade. The U.S. hasn’t imposed tariffs under the law since 2002.

Members of the U.S. International Trade Commission in November issued recommendations to the Trump administration that include tariffs of up to 50% on imported washers exceeding a quota of 1.2 million units annually. The U.S. imported 10.3 million washing machines of all types in the 12 months ending Oct. 31, Panjiva trade data show.

The office of U.S. Trade Representative Robert Lighthizer held a hearing on Whirlpool’s case Wednesday and a decision by Mr. Trump is expected by Feb. 2. Decisions in the other trade cases are expected early this year.

Trade data show U.S. imports of LG washers were down 9% in November compared with the previous year, but nearly triple the level the month before trade regulators ruled for Whirlpool.

U.S. imports of Samsung washers were up 52% year over year, trade data show. November’s imports were up 40% from September, the month before the trade commission’s decision finding domestic washer makers had been injured.

LG and Samsumg, both of South Korea, say they have won over American consumers with sleek designs and innovative features, gaining U.S. market share through fair competition. Both companies plan to open factories in the U.S. this year.

Solar-panel makers are seeking their own safeguard protection. Tim Brightbill, an attorney for SolarWorld Americas, said the import increase highlighted the need for broad protections that foreign companies couldn’t circumvent. “When the president proclaims relief, it needs to be as comprehensive as possible,” Mr. Brightbill said.

The Solar Energy Industries Association, whose members include American buyers of solar panels, has opposed the protection sought by SolarWorld and its ally Suniva, which has sought bankruptcy protection amid a glut of low-cost imported solar panels. It argues the U.S. energy industry could suffer if tariffs push up prices on solar panels.

The solar panel makers “continue to build their case on the premise that they are entitled to a U.S. government bailout because of their abject and numerous failures as manufacturers,” an association spokesman said. Suniva’s parent is based in Hong Kong, SolarWorld’s in Germany.

A Suniva spokesman said: “Evidence of stockpiling proves that China and its proxies will always game the system at every turn and reinforces why the only solution to prevent China’s cheating is for President Trump to provide a remedy strong, long and effective enough to cause American factories to reopen and rehire.”

The Trump administration, meanwhile, announced in April it would investigate whether to limit steel and aluminum imports on national security grounds.

Trade data show the U.S. imported $2.4 billion worth of steel in October, up 37% from the previous year, and $1.9 billion worth of aluminum that month, up 26%.

The increase has fueled U.S. steelmakers’ calls for tariffs amid a rebound in steel prices globally and demand for American steel. The U.S. aluminum industry has complained of excess capacity and unfair trade practices by foreign producers.

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Imports boom as solar tariff deadline looms and ITC reaffirms position

All eyes in the solar industry on Trump for tariff rules.


In anticipation of tariffs that may be levied on solar cell and module imports, foreign solar manufacturers doubled what they shipped to the US in November 2017 compared to November 2016. That’s according to trade data seen by The Wall Street Journal.

The trade data reflects that importers hope to take advantage of good market conditions before any tariffs are imposed. And a new report from the International Trade Commission (ITC) released last week suggests their efforts won’t be wasted. The new supplemental report offers (PDF) some additional support to the Trump administration if it tries to bring a tariff decision before the World Trade Organization (WTO). Specifically, the report suggests that China “took advantage of the existence of programs implemented by the US government to encourage renewable energy consumption” and that the US couldn’t have foreseen that market shift.

The solar cell and module tariffs in question will be decided on or before January 26 by President Donald Trump. The president is permitted to make any tariff decision he pleases if the International Trade Commission (ITC) finds that trade conditions harmed a certain US industry. In September 2017, the ITC made just such a finding, saying that US solar manufacturers had been harmed by cheap foreign imports of solar cells and modules.

Oddly enough, the tariffs are opposed not just by the wider renewable energy industry, but by many Trump-supporting, right-leaning groups. They claim the tariffs would muddy a free market while the industry argues that it has benefitted from being able to sell low-cost panels to residential solar customers.

Determining “unforeseen”

However, even if Trump decides in favor of the most stringent tariffs suggested by the ITC (that is, a 35-percent tariff on all imported solar modules and a four-year, 30-percent tariff on large cells) or if he decides on an even more punitive tariff, Bloomberg notes that such a tariff would have a difficult time getting the approval of the WTO.

In fact, the US has lost every time a tariff decided in a similar fashion has been challenged at the WTO. “[T]o win at the WTO, a company must show it was blindsided by foreign competition that could not have been reasonably foreseen, while the US law only requires companies to show they were harmed,” Bloomberg writes.

In December, a US Trade representative for the Trump administration asked the ITC for more information on any unforeseen developments that led to US-based solar manufacturers being harmed by a free trade environment, presumably to rebut any challenge to new tariffs from the WTO on those grounds.

The supplemental report from the ITC answers that request. In it, the ITC argues that the current solar panel trade situation in the US was wholly unforeseen. When cheap solar panels started becoming available, the ITC writes, the US exercised antidumping laws on Chinese manufacturers. The US did this based on the fact that China offered preferential loans and taxes to solar panel manufacturers and provided “polysilicon, land, and electricity for less than adequate remuneration,” among other incentives.

But those antidumping measures didn’t do much, the ITC says, because the six largest firms that were making cells and modules in China increased their manufacturing capacity in additional countries, especially Korea, Malaysia, Thailand, and Vietnam.

“The large and attractive nature of the US market and the large and growing size of the export-oriented foreign industries caused US imports of [solar cell] products to increase both absolutely and relative to domestic production in each year since 2012, reaching record highs in 2016,” the ITC writes.

The commission continues:

US negotiators also could not have foreseen that the US government’s use of authorized tools, such as antidumping and countervailing duty measures on imports from China, would have limited effectiveness and instead lead to rapid changes in the global supply chains and manufacturing processes in order to facilitate US imports of non-covered products from China and Taiwan and later US imports from Chinese producers’ affiliates in other countries.

Naturally, the primary opponent of solar panel import tariffs, the Solar Energy Industry Association, disagrees with the ITC assessment.

President and CEO Abigail Ross Hopper said in a statement: “This ITC report fails to adequately prove its own conclusion, and we do not see it surviving WTO scrutiny, should it come to that. The current solar market, including its production and trade patterns, was both foreseeable and predicted by experts across the globe.”

She added, “What’s also been predicted are the inevitable job losses in the US and economic harm if tariffs are imposed on one of the fastest-growing industries in America. We urge the president to put America first and say no to solar tariffs.”

For now, the threat of tariffs may be causing the very market conditions that this administration seeks to prevent. Besides increased solar panel imports, the WSJ reports that imports of residential washing machines, steel, and aluminum have all increased considerably in recent months following tariff threats.

After washing-machine maker Whirlpool asked for tariffs similar to those recommended for the solar panel industry, washing machine imports doubled in November. Analysts speaking to the WSJ said an additional six months’ worth of washing machine imports could enter the US before any tariffs go into effect.

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Solar panels, washing machines, and free-trade cronyism

What does Suniva (a bankrupt, Atlanta-based, Chinese-owned solar firm founded in 2007) have in common with Whirlpool (a company founded in Benton Harbor, Mich., in 1911)?



On first blush, not much. One was a short-lived solar firm, the other is a long-time player in the home-appliance market. What ties these two companies together, however, is that both currently are pushing the International Trade Commission to invoke a powerful, but rarely used, trade remedy statute in violation of the World Trade Organization’s rules.

In 1947, the United States joined the General Agreement on Tariffs and Trade in order to create a post-war, rules-based trading system. Among other measures, GATT provided a powerful exception, known as a “safeguard” measure, to our trade commitments. This exception was codified domestically in Section 201 of the Trade Act of 1974 and then ratified by the Uruguay Round, which created the WTO as the successor to GATT, in 1994.

The purpose of safeguard measures is to provide a temporary safety valve to a domestic industry that is threatened by a surge of competing imports. They provide relief in the form of tariffs, quotas, or other restrictions on a particular product. Safeguards are unlike anti-dumping and countervailing duties (AD/CVD) laws, which are designed to counteract “unfair” activities undertaken abroad, such as a foreign company exporting a product at a lower price than it would normally charge in its own market or a foreign government subsidizes a particular industry or product.

In contrast, safeguard measures are applied to fairly-traded imports from all countries, based entirely on market circumstances within the U.S.

Given the extreme nature of the remedy, safeguards are rarely employed. In fact, the last time the U.S. imposed import restrictions under its safeguard powers was in 2002, in a case involving imported steel. The results weren’t pretty, as they included 200,000 lost jobs in industries that use steel and formal sanction from the WTO. After laying dormant for 15 years, however, safeguards are back in vogue among Washington’s trade petitioners’ bar and once again are being misused.

In April, Suniva filed its safeguard petition with the International Trade Commission, seeking large tariffs and a minimum price floor for imported solar products from all countries. Underlying Suniva’s safeguard petition is the claim that, in order to circumvent tariffs imposed by two prior AD/CVD orders, foreign solar manufacturers are moving production facilities to countries not subject to the tariffs.

Shortly after Suniva filed its petition, Whirlpool filed a safeguard petition with the ITC that seeks protection from imports of large residential washing machines. In particular, Whirlpool’s petition is intended to shield itself from its primary competitors, LG and Samsung. In its filing, Whirlpool argued that LG and Samsung have dumped washing machines into the U.S. and have done “an end-run around the U.S. antidumping laws that are intended to remedy such behavior” by moving production facilities to countries not subject to the AD/CVD orders.

Irrespective of the merits of Suniva and Whirlpool’s claims that their foreign competitors unfairly moved production facilities in order to circumvent AD/CVD orders that impose tariffs, the safeguard statutes and rules simply aren’t written to counteract either dumping or subsidization. To be sure, both companies made additional legal arguments to the ITC, but the underlying crux of each petition is an attempt to change foreign trade practices.

Under existing laws, Suniva and Whirlpool have two choices.

First, they could simply refile their cases as AD/CVD petitions and, if successful, expand the list of countries to whom the tariffs apply. This could be costly, but it’s the appropriate way to remedy the allegedly “unfair” practices. The other option is to lobby Congress and WTO members to change safeguard rules. Neither option may be particularly satisfying to Suniva and Whirlpool, but misusing the safeguard power would undermine the rule of law.

By acting as a bulwark against protectionist impulses, both domestically and abroad, the rules-based trading system established after World War II has served America’s interests well. As its most important member nation and the largest global economy, the U.S. has a special responsibility to respect the rule of law and judiciously apply various remedies. Misapplying rules to serve the protectionist agendas of two companies would undermine U.S. credibility at a time of rising protectionist sentiments.

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NAFTA negotiators part for holidays; prepare for pressure-laden talks in 2018

WASHINGTON — NAFTA negotiators parted ways for the holidays without completing any chapters Friday, preparing to reconvene in the new year for what could be a pressure-cooker period of bargaining through early 2018.


Canadian, Mexican and American negotiators left a week’s worth of discussions in Washington without any agreements to announce, citing only incremental progress in scaling the tall challenges ahead.

Those challenges include new statistics showing business anxiety over NAFTA; repeated threats from President Donald Trump to begin withdrawing the U.S. from the agreement; and the constraints of the political clock.

The current schedule for negotiations concludes in March and it’s uncertain what happens afterwards: Mexico and the U.S. will be embroiled in national election campaigns, for the presidency in Mexico and the Congress in the U.S.

The countries met this week at a Washington hotel in an effort to clear away some easier issues so they might devote upcoming rounds to the hardest issues — autos, agriculture, Buy American and dispute-resolution systems.

The countries reconvene Jan. 23 in Montreal.

“It was like an actual trade negotiation,” one Canadian official said of this week’s gatherings, where only some working groups met.

“(It was) trade negotiators doing hum-ho work … technical, uninteresting work that needs to get done.”

While no chapters closed out this week, he cited progress on telecommunications, environmental regulations and on an annex on energy performance standards.

There is also emerging talk about the search for solutions to difficult problems.

After initial rounds marked by acrimony, stakeholders and government officials have begun discussing various ideas for getting around impasses prompted by U.S. demands which other countries called non-starters.

A key example involves auto parts.

The Canadian team is weighing an idea for a new formula to calculate what constitutes a North American tariff-free vehicle. It would incorporate the overall value of a car’s pricey new technologies like computer systems, automation, fuel-efficiency technology and ultra-light materials.

Its logic is that such a formula would benefit cutting-edge technologies where the U.S. is a world leader and keep valuable clusters operating on the continent. But it would be more flexible than the American proposal for a U.S.-specific content requirement in cars.

Canadian officials said no formal proposal has been made to the U.S. yet. But chief negotiator Steve Verheul told a recent gathering of parliamentarians in Ottawa that he intended to probe his U.S. peers for a better sense of their objectives on autos and what different paths might be used to arrive there.

Mexico has also drawn up a counter-proposal on another controversial U.S. idea: a sunset clause that would end NAFTA in five years, unless all countries extend it. Mexico’s idea, one supported by Canada, is to include a way to review the deal’s progress every few years — without the automatic-cancellation trigger.

A source familiar with the U.S. view says the American side sees small, potentially encouraging signs that the other parties are seeking solutions, although it’s still unclear what tangible proposals might emerge. The U.S. has been frustrated with the other parties’ failure to produce counter-offers on the hardest issues.

There was a fresh indication Friday that NAFTA-related uncertainty is weighing on Canadian businesses.

A report by Export Development Canada said nearly one-quarter of Canadian exporters reported feeling negatively impacted by the NAFTA negotiations and among that number, 14 per cent were delaying investments, 26 per cent were contemplating moving some operations to the U.S., and 23 per cent wanted to diversify outside North America.

What keeps Justin Trudeau awake at night? Deadlock on NAFTA talks

If there is one thing that keeps Prime Minister Justin Trudeau awake at night it’s the unresolved trade deal between the United States, Mexico and Canada.


“There’s a level of unpredictability, that’s out of our control and we know if the relationship with the U.S. goes sour, we could be doing everything right at home and our economy would still end up suffering,” Trudeau told Global News. “That’s the level to which we are dependent on the U.S. So that’s something that I think people know we’ve devoted an awful lot of energy to.”

As 2017 comes to a close, the prime minister said his focus for 2018 will be on the economy and securing a modernized North American Free Trade Agreement.

Talks are scheduled to resume in Montreal in January with major issues like car manufacturing, dispute settlement and an expiry clause yet to be resolved, while U.S. President Donald Trump has complained publicly that NAFTA has left the United States with a huge deficit in trade with Canada.

“A modernized NAFTA is the best possible outcome and that’s certainly what we’re working towards in a serious and diligent way,” Trudeau said. “We’ve successfully communicated to the [Trump administration] that triggering a termination isn’t going to have them be able to negotiate a better deal with Canada.”

“It’s not that we wouldn’t suffer as a country or we wouldn’t take a hit if [Trump] cancelled NAFTA, we would. But we also know that the U.S. would take a significant hit as well,” Trudeau said. “It would hurt both of our sides … It won’t be great, but, you know, we’ll all survive and we’ll dig in and figure it out.”

Canadian negotiators were in Washington last week for “intersessional” NAFTA talks. One of the main sticking points is demands from the Trump administration over automotive manufacturing which could cut in half the content for North American-made vehicles from outside the U.S. along with increased regional quotas.

Canada and Mexico rejected the U.S. proposal last month in Mexico City and will look to offer a counter-proposal in Montreal.

Trudeau said the “red line” for his government is whether or not a new NAFTA deal is going to be good for Canadians.

“I hate to talk about clear red lines because the red line for us is, is the deal going to be good for Canadians or not?” he said. “Is it going to protect individuals’ rights and workers’ rights? Is it going to give us an opportunity to grow the economy in ways that include everyone, include the middle class and those working hard to join it? That’s the question I’m looking at.

“And if it doesn’t, unlike what one of our former prime ministers said, I’m not going to sign any deal at any cost,” Trudeau added. “If it’s a bad deal, I’m going to walk away from it, because no deal is better than a bad deal for Canadians.”

For Trudeau, he will also use the New Year to hit the reset button for his administration which has been at the centre of a series of ethics controversies. The prime minister defended his government, specifically Finance Minister Bill Morneau, and announced he will embark on another series of town halls across Canada in January.

Canada will also have to continue working with the erratic presidency of Trump, something Trudeau said that people across the country “are very aware of.”

“My responsibility is to have a constructive relationship with the United States and stand up very strongly and clearly for Canadian positions and values,” he said. “I have a good relationship with the president where he knows we disagree on a whole bunch of things, and so do I, obviously, but we still manage to work together on the things that we do agree on, like making sure that the middle class is doing better. That’s where we find alignment.”

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Dias, president of the Canadian union Unifor

DETROIT — The North American Free Trade Agreement “is going to blow up in 2018.”

That blunt assessment comes from the equally blunt Jerry Dias, president of the Canadian union Unifor.


Dias has long been a harsh critic of NAFTA. He says it has been disastrous for Canadian and U.S. manufacturing workers — on that much, he and President Donald Trump agree. And it hasn’t done much for Mexican workers, whose low wages and weak labor rights prevent them from being able to afford the vehicles they build, he said.

Dias, for his part, would prefer to see NAFTA not scrapped, but strengthened with better wage and labor standards for Mexicans that would make Canadian manufacturing a more competitive proposition and help stem the southward migration of jobs.

Many private-sector interests still hold out hope that the Trump administration’s hard-line positions are simply negotiating tactics that will lead to a compromise, or that Congress will block attempts to unwind a deal that has helped increase U.S. manufacturing exports by 258 percent since its inception.

But given where the talks stand now, Dias said, that won’t happen.

“I’m convinced that unless Donald Trump folds, which he won’t, then NAFTA is gone,” Dias said during a nearly 90-minute editorial board meeting with Automotive News.

If that happens, Dias said, a pre-existing U.S.-Canada free-trade agreement will live on.

Dias said that while he’s not at the negotiating table, he has a close-up view of the proceedings. He is among a group of stakeholders consulting with Canadian officials on the pact and has had multiple meetings with Foreign Affairs Minister Chrystia Freeland, chief negotiator Steve Verheul and other Canadian officials, as well as U.S. Commerce Secretary Wilbur Ross.

‘Unfettered access’

“I’ve been having unfettered access to those who make the decisions, but I’ve also had a complete green light, understood and sanctioned by the government, to say whatever the heck I feel like,” Dias said. “It’s not as if they’re going to change my mind. But they understand that bringing in labor as part of the team is quite helpful.”

Unifor represents workers in 20 of Canada’s largest industrial sectors, including telecommunications, health care and autos. That diversified membership gives the union a broad political base and more clout, Dias said, especially with Prime Minister Justin Trudeau’s pro-labor Liberal Party.

The reopening of NAFTA negotiations presented the union an opportunity to lay out its full agenda, including pushing for stricter enforcement of labor standards in Mexico.

Winning bet

But between Trump’s pledge to build a wall on the Mexican border and fresh disputes with Canada over softwood lumber and aerospace, he said, it has been clear there isn’t enough good will to keep the talks on track toward a new agreement.

“I am probably going to win more wine in 2018 than anyone in the history of wineries because I have bet every journalist in Canada, Mexico and the U.S. that NAFTA would not be re-signed by the end of 2017,” Dias said. “I have to put in a wine cellar in my condo.”

The pending U.S. demands make that a much surer bet, Dias said, especially the Trump team’s call for an 85 percent regional content requirement, with 50 percent U.S. content, on all vehicles imported into the U.S. It would leave Canada and Mexico fighting for a scrap of the remaining share, Dias said, and Canada’s $37-an-hour wages couldn’t hope to compete with Mexico’s $2 rate. Canada will never agree to the U.S. content requirement, he said.

He also pointed to the U.S. push for a five-year sunset clause as a sign of bad faith. “If we signed NAFTA in 2018 with a five-year sunset clause, who is going to make a major investment in 2020 knowing that it can blow up in three years?”

“Nobody believes the United States wants an agreement,” Dias recalled telling Ross in one meeting, adding: “Once Canada and Mexico got the indication that the United States wasn’t serious about an agreement, it’s all done.”

At this point, neither Canada nor Mexico would be motivated to offer even a face-saving outcome for Trump.

“Nobody in Canada and Mexico wants to throw him a victory party,” Dias said. “He’s inherently unpopular. They think he’s dangerous and foolish. For Trudeau, who’s riding pretty high in the polls, to be perceived as folding to Trump is politically damaging.”

The sixth round of NAFTA talks is set to begin Jan. 23 in Montreal.

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