More NAFTA Concessions Expected at '11th Hour' of Negotiations, Canada Expert Says
As the director of the Wilson Center's Canada Institute ran through the areas of conflict between the U.S. and Canada in NAFTA talks -- procurement, cultural exemptions, extended patents for biologics -- she made predictions in some arenas and shrugged on others. When it comes to whether Canada will raise its de minimis from $25 Canadian to $100 U.S., as Mexico has done, Laura Dawson merely said, "These are the kinds of concessions you get at the 11th hour. We're maybe at hour 10, hour 9."
Dawson, a former Mexican ambassador to the U.S. and the AFL-CIO's trade director all were talking about NAFTA's state of play at a Washington International Trade Association event Sept. 13. Ambassador Arturo Sarukhan, now a senior fellow with the Brookings Institution, talked about whether Mexico stabbed Canada in the back by settling with the U.S. on NAFTA first -- he said no, it didn't. The conventional wisdom is that the U.S wanted to divide and conquer in the talks, but Canada and Mexico agreed they needed to hang together, or they'd hang separately (see 1808020032), he said. Sarukhan said that privately, Canada wasn't so devoted to unity. He said Canadian politicians thought if U.S. talks with Mexico collapsed, they still could revise NAFTA as a bilateral deal. "So there's a bit of karma there," he said.
The experts disagreed on how much leverage the U.S. has in its demands for concessions. Dawson said she expects the U.S. will get a slightly better market access provision in dairy than it would have gotten in the Trans-Pacific Partnership. Moderator Matt Gold, a law professor at Fordham University, believes the U.S. may not even get as much market access as it would have in TPP, but that Canada will abandon Class 7, which added diafiltered milk to the larger dairy protectionist scheme.
Dawson said she doesn't know if Canada will hold on at all costs to the dispute settlement chapter, Chapter 19, that allows Canada to challenge antidumping cases outside U.S. courts. In an interview with International Trade Today unrelated to the event, Venable's Jeff Weiss said he thinks the U.S. trade representative is highly motivated to dismantle Chapter 19. Weiss, a partner in the international trade and logistics practice, used to be a Chapter 19 lawyer when he worked at the Office of the U.S. Trade Representative. "I do think there is a compromise there, but I don't think either side will propose it," he said. The way Chapter 19 works is that a binational panel is formed to evaluate the antidumping and countervailing duties actions, and there's a coin flip to whether there will be three Canadians and two Americans or vice versa.
He described USTR's view of the panels. "If it's the same standard of review [as the Court of International Trade], why do you need nationals of your own country?" But Weiss said he thinks the sovereignty issues could be eased somewhat if appeals of the binational panel's rulings went to the appellate court in the host country instead of to an Extraordinary Challenge Committee.
The panelists also talked about the political future of NAFTA if a trilateral deal is reached. Celeste Drake, a trade specialist at the AFL-CIO, said that while the labor improvements sound good, if there's not a strong enforcement mechanism "then what you've got is another set of lovely promises that are going to be effective to get the votes on the Hill you need from Democrats" but not for changing the status of Mexican workers.
Although Drake expected to be in opposition with the other panelists, Sarukhan told her, "I couldn't agree with you more, the lack of a right to collective bargaining has been a huge Achilles' heel for Mexican labor markets and for Mexican economic growth." Sarukhan said the path to ratification in Mexico and Canada would be complicated if Donald Trump brags he got the best of them. "We all know President Trump is going to spike the ball in the end zone before November," he said.