Canadian Ambassador Says de Minimis Changes Likely Through NAFTA

Canadian Ambassador to the U.S. David MacNaughton pointed to one of President Donald Trump's tweets about e-commerce to explain why Canada sees the need for conservative de minimis levels, but said changing it has been under discussion in NAFTA negotiations. "Is there a number between 20 [dollars] and 800 [dollars] that works? Probably," he said. He said he presumes that before the deal is finished, Canada will raise its de minimis level, but said it will probably be to a lot less than $800. He also said he doesn't expect the U.S. de minimis level to necessarily move down to the same amount Canada agrees to.

MacNaughton was speaking to journalists at the Canadian embassy in Washington on April 26, and said it was a welcome break from the negotiations. He said he joked to U.S. Trade Representative Robert Lighthizer that if he hadn't needed to leave for that engagement, "I would've scheduled a root canal at the end of the day to ease the pain."

U.S. negotiators are reminding their Canadian counterparts that Trump repeatedly said on the campaign trail that NAFTA "was the worst deal ever," and emphasizing that they need big changes to the trade deal so that he can keep his campaign promise. MacNaughton said sometimes governing makes you realize your campaign promises were off-base. He also said, "The thing we've been trying to convince the U.S. of is this isn't a zero-sum game. This isn't win-lose."

Changes to the auto rules of origin is the top priority for the U.S., which aims to move more vehicle production out of Mexico and into the U.S. As they work on rules of origin, MacNaughton said the negotiators are working to find "different ways of measuring it that will reduce the amount of red tape" for producers.

When asked if the three countries can really reach a compromise on even an agreement in principle in a week or two, he responded that "nothing is impossible if you really want it." He said he didn't return home until after midnight Monday, Tuesday and Wednesday nights, and that Canadian negotiators are prepared to continue at this intense pace as long as progress is being made. However, there will be at least a short break, since Lighthizer is going to China on Tuesday, he said.

The ambassador also touched on other trade issues between the U.S. and Canada. MacNaughton said Canada, where the U.S. sends more exports than to China, Great Britain and Japan combined, is puzzled why it would be part of a steel and aluminum trade remedy aimed at countries that subsidize production. Canada is by far the largest exporter of aluminum to the U.S. "We're not trying to get at you," he said Americans have told him. He said he replies, "Why are you punching me in the nose, then?"

MacNaughton cast the antidumping case on newsprint as a business tactic by a private equity firm that bought a paper plant. He said the firm has "taken the opportunity to do things through U.S. trade law they couldn't do in the market." He said he sees it as "an abuse of trade remedies."