NAFTA: Don’t Bring Out the Tequila Just Yet

Developments: there have not been many since renegotiation of the North American Free Trade Agreement began. The breakthrough announced yesterday evening between the United States and Mexico is an encouraging sign. What exactly the two partners agreed upon remains to be seen, as is what is needed for Canada to join them.

“I hope we … [can] raise a good toast with tequila, of course, to celebrate this understanding,” Mexican President Enrique Peña Nieto told Donald Trump yesterday morning.

The tequila, however, will have to wait. Peña Nieto mentioned it several times yesterday: Mexico wants a trilateral agreement that includes Canada. And that hasn’t happened. For that matter, if it were up to the American president, it would never happen.

Trump, who has never hidden his preference for bilateral treaties, has once again alluded to the possibility of replacing NAFTA with two separate trade agreements. And he resorted to another of his favorite threats, imposing a tariff on Canadian automobiles. Fortunately, the president doesn’t have complete control over these levers. If he ever ventures to activate them, he has a good chance of finding Congress and the American courts in his way.

At the moment, the only advantage that can be attributed to Trump is having retaken control of the stage.

Despite a slightly muddled moment during which he struggled on camera to set up a telephone conference with his Mexican counterpart, he is clearly setting himself up as the game master.

Peña Nieto generously buttered him up, highlighting his “political will and … participation,” as well as “the accompaniment and the support” of his son-in-law, Jared Kushner. And in the absence of a bilateral agreement, the president imposed a bidirectional negotiation: now that the White House is finished with Mexico, it is Canada who is called into the parlor.

Canadian Foreign Minister Chrystia Freeland had to cut short her visit to Europe to be in Washington today. Government sources may well assert that progress between the United States and Mexico was necessary for negotiations to progress, and that it is good news, because it will allow Canada to return to the table. Now the pressure is on her.

What exactly have the United States and Mexico agreed upon? In the absence of official news, it was reduced to speculation yesterday.

Certain elements, like the compromise on sunset clauses, seem like they would be acceptable for Canada. In the automobile sector, there will have to be a response from workers and companies, but one could live with the concessions made by Mexico on this side of the border.

“It remains to be seen what the Americans will demand from Canada. Is it simply agreement with what they have negotiated with Mexico, or will there be other demands?” asked Patrick Leblond, professor at the University of Ottawa’s Graduate School of Public and International Affairs.*

What happens to the famous Chapter 19 on dispute resolution, which Canada defined as a line not to be crossed, is still very vague – as are many other aspects, for that matter.

President Trump named only one Canadian target yesterday, the “tariffs of almost 300 percent on some of our dairy products.” Unsurprisingly, supply management is still in the crosshairs. And in this challenge, the pressure won’t just come from Washington. In the middle of Quebec’s election campaign, Justin Trudeau’s government should also be ready to respond to strong internal pressure.

*Editor’s note: Although accurately translated, the source of this quote, presumably spoken in English, could not be verified.

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