Lighthizer Says NAFTA Countries "Sort of Running Out of Time" for Trilateral Deal

U.S. Trade Representative Robert Lighthizer cast doubt Sept. 25 on a trilateral NAFTA coming together, saying that the parties are "sort of running out of time," because if the deal isn't done before the current administration in Mexico leaves office, the incoming president will want to reopen negotiations. The U.S. and Mexico have come to many agreements bilaterally in recent weeks.

Across town a few hours earlier at the Council on Foreign Relations, Canadian Prime Minister Justin Trudeau didn't praise the bilateral agreement as paving the way for a trilateral one, as his foreign minister had done when the details first were released in late August (see 1808290005). He merely said that "there’s a possibility there to build on what they agreed."

Lighthizer said: "I think the U.S. would like [Canada] to be in the agreement, but there is still a fair amount of distance between us. The fact is Canada's not making concessions in areas where we think they're essential." Lighthizer, who was speaking at the 2018 Concordia Annual Summit in New York, pointed to Chapter 19 and dairy as two sticking points on the Canada side. "We're going to go ahead with Mexico. If Canada comes along now, that'd be the best. If Canada comes along later, then that's what'll happen," he said.

He criticized members of Congress who insist Canada has to be in, and then turn around and say "Oh, by the way, Canada has to give on a whole variety of things." Many members of Congress have pressed Lighthizer to get Canada to drop Class 7, a recent change to its dairy supply management system. He said, "This is a once-every-20-years opportunity to correct protectionist things. You have to take advantage of that."

Canada's Foreign Minister Chrystia Freeland was asked at the Council on Foreign Relations why Chapter 19 is so important to Canada. "We agreed we would not be negotiating in public," she said, declining to engage on the question, but eventually said that rule of law is important in Canadian democracy, "including trade."

Lighthizer, responding to a question from the U.S. Chamber of Commerce moderator at the other event, said while he prefers a trilateral deal, the administration will not walk away from what he called the "fabulous" Mexico agreement because Canada's not ready to make concessions yet. "Hopefully, we'll end up with something with Canada. If not, we'll have to do it in a separate deal as soon afterwards as we can. We're certainly not going to give up. They're a huge trading partner of the United States, but we're going to have a high-standard deal. We want to end up with a high-standard agreement that both parties can accept and find useful."

He said the U.S. is no longer expecting to eliminate aluminum and steel tariffs on Mexico and Canada as part of a new NAFTA. "I think our view is we’ll turn to that as a next stage," he said.

At the Canadian panel, the moderator asked Trudeau how Canada could be a national security threat to the U.S., given that Section 232 is supposed to impose tariffs or quotas on national security grounds. He responded that the U.S. is talking about economic security, not military security as one usually thinks when hearing "national security." "My focus on this throughout has been simply not escalating, not opining, not weighing in. In order to defend Canadians’ interests, having a constructive relationship with the president … is something that we need to do," Trudeau said.

He did seem to make a veiled criticism of the Trump administration as he talked about how Canadians, too, have economic anxiety around offshoring and robots taking their jobs. "As leaders, we have to make a decision -- do we see those fears and choose to amplify them for short-term gains, or do we see those fears and say, 'We can solve this if we pull together'? That choice between choosing to augment insecurities and amplify them versus saying 'you know, we got this together,' I think is one of the starkest contrasts we can see in political discourse around the world today."