The third round of talks on “renegotiation and modernization” of the North American Free Trade Agreement (NAFTA) was held in Ottawa, Canada, from September 23-27, 2017. According to a Trilateral Statement on the Conclusion of the Third Round of NAFTA Negotiations, the negotiators “made significant progress in several areas through the consolidation of text proposals, narrowing gaps and agreeing to elements of the negotiating text.” While the negotiations themselves are not conducted publicly, the Trilateral Statement describes “meaningful advancements…in the areas of telecommunications, competition policy, digital trade, good regulatory practices, and customs and trade facilitation.” The fourth round of talks is scheduled to take place in Washington from October 11-15, 2017. In the interim, Canadian, Mexican, and U.S. negotiators “will continue their work and consult with their respective stakeholders” in preparation for the next round.
Press reports indicate that negotiators “are working nights and weekends to bring the deal to a close” but that many of the most contentious issues have yet to be discussed formally. For example, the most recent Trilateral Statement indicates that “initial offers” were exchanged between the parties regarding “the area of market access for government procurement”, which has long been among the most contentious areas of the U.S.-Canadian trade relationship. Mexico also sees government procurement as a key topic in the talks. Mexican Secretary of the Economy Ildefonso Guajardo has indicated that the fourth round of NAFTA renegotiations will raise “substantial challenges”, and that the process could extend into 2018.
Another potential flashpoint in future rounds will be the binational panel review mechanism for “final determinations” in certain antidumping and countervailing duty proceedings that are conducted by investigating authorities in Canada, Mexico, and the United States. These proceedings are referred to as Chapter 19 Binational Panel reviews because they arise from Chapter 19 of the original NAFTA. A specific NAFTA negotiating objective of the United States is to eliminate “the Chapter 19 dispute settlement mechanism.” In contrast, Canada has expressed strong support for Chapter 19, and former Canadian ambassador to the United States Derek Burney recently stated that Canada “wouldn’t have done the original agreement if we didn’t have it” because it was designed to “rectif[y] the power imbalance” between Canada and the U.S. economy. Canadian press reports are already casting the Chapter 19 dispute settlement process as a way to “save” Canadian aircraft manufacturer Bombardier’s C-Series aircraft, which is the subject of an ongoing AD and CVD investigation in the United States.
We will provide you with further updates on the NAFTA renegotiations in next month’s edition.
