#1 NAFTA TALKS HIT WALL; NEGOTIATIONS TO STRETCH INTO 2018


Following the 4th round of negotiations in Northern Virginia last week, all three parties have decided it’s time for a breather. With negotiations at a standstill, the countries announced at the closing press conference that the next round – scheduled to be held in Mexico – will not start until November 17th. This is a big departure from the breakneck speed of negotiations that the parties had committed to in August, in which negotiations were to be held roughly every three weeks.

What it means: The prolonged pause is a cooling off period and has been welcomed by most in the business community who want their issues carefully considered, rather than brought to the table in negotiations and rushed to conclusion. It has also been welcomed as a way to diffuse anger over the hard line negotiating positions put forward by the U.S.

But wait:
Any extension in talks has political consequences on the backend. That’s because all three countries have recognized the enormous challenge Mexico will have in agreeing to a deal the closer negotiations stretch toward the country’s July 1, 2018 elections.


#2 – WHAT’S HOLDING THINGS UP? THE “BOMBSHELLS” – ROUND 4 EDITION


A look at a few of the contentious proposals that have surfaced in negotiations:

The sunset clause: A U.S. proposal put forward in the fourth round that would allow NAFTA to expire after 5 years unless the parties agree to extend it. More HERE.

Who likes it: The administration.

Who doesn’t: Canada, Mexico, U.S. business groups.

Increasing auto rules of origin requirements:
A U.S. proposal that increases the percentage of content from North America a car or auto part must have to qualify for duty free status under NAFTA. More HERE.

Who likes it:
The administration, organized labor, some Hill Democrats
Who doesn’t:
The auto industry, Mexico.

The seasonality provision
: A U.S. proposal that would make it easier for growers of seasonal produce in the U.S. – mainly those that have growing seasons that coincide with Mexico’s - to bring trade actions against Mexico. More HERE.

Who likes it: Growers in the Southeast - particularly in Georgia and Florida
Who doesn’t:
Mexico, the majority of growers, ag groups and many retailers in the U.S.

Dairy dispute: A U.S. proposal that would provide American farmers with additional dairy, egg, and poultry access in the Canadian market and roll back Canada’s supply management system. More HERE.

Who likes it: U.S. dairy industry
Who doesn’t:
Everyone in Canada

There’s more: While the above issues have garnered recent attention, dispute settlement, procurement, the U.S. focus on trade balances, and other issues continue to roil talks.

#3 – LEGAL CHALLENGES TO NAFTA WITHDRAWAL PONDERED

The Wall Street Journal ran a story last week on what is a growing conversation in D.C.: potential legal challenges to a NAFTA withdrawal. To date, there has been disagreement in the legal community on whether the Trump administration can unilaterally withdraw without Congress playing a role. The discussion often focuses on what authority is provided to Congress in the NAFTA implementing legislation. READ more on the debate here.


#4 – LIGHTHIZER OPENS UP

By all accounts, U.S. Trade Representative Robert Lighthizer is press shy. Which is why it was news on its own that he held a wide ranging briefing with reporters last week. Shawn Donnan of the Financial Times certainly thought it was an interesting discussion:


Vicki Needham of the Hill had a good roundup of the Lighthizer conversation HERE.

#5 – NFTC CHAIR OUTLINES BUSINESS CONCERNS OVER NAFTA

Lighthizer wasn’t the only one who came out swinging following the 4th round. Rufus Yerxa, President of the National Foreign Trade Council, which counts a wide array of major U.S. businesses among its members, held his own media briefing to make the point that the biggest beneficiary from NAFTA’s perilous state is China.

#6 – NEW TRADE POLL’S BIG TAKEAWAY: VIEWS ON NAFTA HAVE FLIPPED

A new poll was released by the University of Maryland last week that shows:

“The sharpest divergence between the parties is on the question of NAFTA. Large majorities of Republicans now say that NAFTA has been bad for the US while large majorities of Democrats say it has been good.”

To be precise:Republican approval of NAFTA has taken a deep dive since 1999 - from 44 percent to 28 percent while Democratic approval of NAFTA increased from 50 percent to 76 percent.

#7 – WORTH THE READ: NYT AND WAPO GO INSIDE THE WHITE HOUSE TRADE DEBATE

The NY Times and Washington Post had dueling stories last week that profiled the backroom brawling over the Administration trade agenda. Peter Navarro, unsurprisingly, plays a starring role in both pieces which are worth the read.

NY Times: Trump’s America First Trade Agenda Roiled by Internal Divisions

Washington Post: Internal White House documents allege manufacturing decline increases abortions, infertility, and spousal abuse


Prepared by Matt McAlvanah (matt@monumentpolicy.com) and the Monument Trade Team
Download a PDF of this report HERE