Confused about the difference between NAFTA and USMCA? Check out this graphic from PNWER partner the Pass USMCA Coalition. 

We applaud the announcement today regarding the agreement reached to lift steel and aluminum tariffs on Canada and Mexico and associated retaliatory tariffs. PNWER has focused on this issue as a top priority for the region for the past year. This important step helps clear a major hurdle in all three countries in finalizing the US-Canada-Mexico Agreement (USMCA).
 
“I applaud the announcement today. When markets are open and goods are transported freely across borders, the result is economic growth, new businesses and more and better job opportunities for individuals.”, said PNWER President Larry Doke, MLA Saskatchewan.
 
Oregon Senator Arnie Roblan, Past President of PNWER said, “Here in the Pacific Northwest, we are stronger by working closely together, and our relationships are intact because of the ongoing partnerships in every major sector of our economy, and in state, provincial, territorial, local, and tribal governments, this announcement helps us to maintain these important relationships.
 
"This is great news, said Matt Morrison, PNWER's Executive Director, " PNWER has worked for the past 12 months to encourage the Administration to remove the Section 232 Tariffs, and Canada and Mexico to agree to the removal of their retaliatory tariffs, all of which have significantly impacted our farmers, ranchers, and manufacturers in both countries in our Pacific Northwest region."
 
The US and Canada’s trading relationship is incredibly important to the Pacific Northwest. The US and Canada have the largest trading relationship in the world, and here in the Pacific Northwest, we benefit from the two-way trade of over USD $541 billion (CAD $630 billion) annually, of which about USD $22.6 billion (CAD $29 billion) is in the Pacific Northwest.

President Donald Trump of the United States, former President Enrique Peña Nieto of Mexico, and Prime Minister Justin Trudeau of Canada signed the United-States-Mexico-Canada Agreement (USMCA) in November of 2018 to replace NAFTA. The new deal proposes a number of updates to the old agreement which has governed North American trade since 1994.

USMCA includes a number of new provisions intended to benefit North American firms while liberalizing trade between the three partner states. For instance, the USMCA raises wage floors for automotive workers and tightens country-of-origin requirements. The deal addresses restrictions on dairy trade between the United States and Canada, and contains a pledge to refrain from currency manipulation, which were issues unresolved by NAFTA.

The USMCA also includes a sunset clause scheduling legislative reviews and possible modifications for every six years. This stipulation allows for periodic adjustments in the event that portions of the deal are less efficient than projected.

Although the three executives support the agreement, the deal still needs to be ratified by the legislatures of the partner states in order to be enacted. In Washington, D.C., it is unclear about the future of the agreement. Members of Congress have indicated that there are components of the USMCA that should be improved. Like all trade agreements, there is gain for every signatory. Agreements are not designed to prioritize the interests of one country over those of its partners.

It is worth noting the magnitude and importance of trade between the United States and Canada. The U.S.-Canada trade partnership is one of the largest in the world. The total value of trade between the two countries reached $673 billion in 2017 -- Canada’s largest partner is the United States, and is the United States' second largest trading partner. Canada is the largest goods export market for the United States at $282.3 billion in 2017, and 76% of all Canadian exports are to the United States. The U.S. Trade Representative estimates that 1.2 million U.S jobs are supported through this export market alone. Canadian foreign direct investment (FDI) in the United States has also increased substantially in recent years, led by manufacturing, wholesale trade, and finance.

Uncertainty over North American trade against a backdrop of tariffs and tariff retaliations jeopardizes the stability of the U.S.-Canada trading partnership. If action is not taken soon and barriers to trade persist, exports and FDI will suffer. Decreasing international competitiveness among firms means that those exporters will lose their hold on foreign markets as more competitive foreign producers gain access. This was the case of U.S. soybean exports when protectionist policies escalated between the Trump and Xi Jinping administrations. There is a chance that those soybean exporters might never regain the market access they held in China.

The likelihood of the USMCA’s ratification has dominated debates and commentary over the future of the deal. The agreement still faces a series of hurdles in Congress on its path to ratification. U.S. Trade Representative Robert Lighthizer is currently meeting with lawmakers to brief them on the USMCA’s provisions. Members of Congress have expressed concerns with a few components of the agreement. Some are worried about deal’s implications for labor standards. They point to the fact that the Mexican government may not update its organized labor laws according to the deal’s stipulations. In this case, they argue, there is no adequate means of enforcing the agreement and protecting Mexican workers. Speaker of the House Representative Nancy Pelosi (D) has gone as far as to say that there will be no vote on the agreement until Mexico reforms its labor laws. The Mexican government claims that it is in reach of passing these reforms before a congressional recess in late April.

Other dissenting legislators criticize the deal for its intellectual property rights concessions to large pharmaceutical companies. On the other side, pro-business interests attack measures which weigh on free trade, like country-of-origin requirements for automobile parts.

Legislators on both sides of the aisle have called for the removal of steel and aluminum tariffs as a requisite for the deal’s ratification. Recently, Finance Committee Chairman Senator Chuck Grassley (R) echoed this demand. Canadian officials have indicated that the passage of the agreement in Parliament is contingent upon the removal of Section 232 tariffs on steel and aluminum. Critics argue that these tariffs, which the Trump administration implemented on grounds of national security, constrict free trade and cause political friction at odds with the spirit of an international trade agreement. Business leaders across the United States, as well as non-profits like PNWER, have advocated for the removal of the Section 232 tariffs, which hurt firms across borders.

The USMCA enjoys its most robust support from private sector actors. In February, a coalition of firms and organizations including the U.S. Chamber of Commerce, the National Association of Manufacturers, Fiat Chrysler Automobiles, and the American Farm Bureau Federation pledged their support for the deal. A number of other American manufacturing and agriculture-related organizations have also come out in support of the agreement.

The future of the USMCA is uncertain, as the vote which Trump and many Republicans hope to reach this summer is not yet guaranteed. The U.S. International Trade Commission will publish economic projections of the USMCA by April 19, an evaluation which may sway legislators in favor of or against the agreement. However, the political trappings of ratifying the agreement may weigh just as heavy as any economic analysis. Democrats are aware that approving the deal would mean a major policy victory for Trump, prefacing his run for re-election. Partisan calculations will certainly present another obstacle for Trump and Lighthizer as they push the agreement toward Congress this summer.

Speaking pragmatically, if the USCMA is not ratified, trade will most likely continue according to NAFTA’s provisions, but it is unlikely that the 232 tariffs will be lifted. Some firms can request waivers for those tariffs, but this complicates business operations and not all companies are even aware of this option. Ideally, legislators and the U.S. Trade Representative will resolve disputes over labor and environmental standards and freedom of trade in a timely manner. However, these demands are, to an extent, antithetical, and a compromise deal which satisfies all parties is unlikely to emerge in the near future. In light of persisting tariffs, it is worth asking ourselves: if the USMCA is not ratified, where do we go from here?
​
By Daniel Green, PNWER Policy Intern. Daniel is a senior undergraduate student at the Jackson School of International Studies at the University of Washington.

Resources:
Pelosi Says the House Won’t Hold USMCA Vote until Mexico Changes Labor Laws 
Market Watch- April 2, 2019  

Trump Trade Deal with Canada, Mexico Still Faces Hurdles 
​Boston 25 News- April 1, 2019

Guest Opinion: Congress Must Approve Canada/Mexico Trade Agreement
Idaho Politics Weekly- March 31, 2019

Mnuchin: Lifting Tariffs Part of Plan for USMCA Passage
Politico- March 15, 2019

Democrats Cool Toward NAFTA Replacement, Question Labor Standards
Reuters- March 13, 2019

Liberal Wing of Democrats Wants Changes to NAFTA Replacement
Politico- March 12, 2019

US Working on Plan to Lift Tariffs from Canadian Steel and Aluminum: Trade Chief
Global News- March 12, 2019

Mexico’s Government Says Ratification of USMCA Contingent upon End to Section 232 Aluminum and Steel Tariffs
Aluminum Insider- March 6, 2019
​
USMCA Faces an Uncertain Path through Congress
Marketplace- March 5, 2019

US Auto Chief Courts Auto Union to Support North American Trade Pact
Reuters-March 1, 2019

China Trade War Update: A Trickle of Soybean, Oil Exports
Forbes- February 19, 2019

Senate Finance Chair Says Tariffs on Steel, Aluminum Should Go
​Reuters- January 30, 2019

U.S.-Canada Trade Facts 
​Office of the Unites States Trade Representative

PNWER CEO, Matt Morrison, recently represented PNWER in Washington, D.C. at the ​111th Annual Winter Meeting of the National Governors Association (NGA) as well as in meetings with Congressional leaders and agencies. Key issues to the PNWER region like USMCA, tariffs, and aquatic invasive species were discussed. Keep reading below for an overview of PNWER’s meetings.

​A second key event was a roundtable organized by Governor Steve Bullock of Montana, the 2018-2019 Chair of the NGA, with the Premiers and ten U.S. Governors. This roundtable allowed the Premiers of Canada to speak directly to their U.S. counterparts on the issues of trade and tariffs and dialogue on the impacts to their constituents. 
​
Lastly, the NGA hosted federal leaders from the U.S. and Canada who spoke about the next steps for ratification of USMCA. One key takeaway from this session was the assertion that the Canadian Parliament has only three months left in its 2019 sitting and is unlikely to take up ratification unless                                                                                                                  Section 232 tariffs are lifted. 

​The USMCA and tariff discussion will be a featured issue during the 2019 PNWER Annual Summit in Saskatoon, Saskatchewan, this July 21-25. Hear from policy experts, legislators, and others during keynotes, panels, and sessions that highlight this important cross-border issue.  Join us in Saskatoon in July. More details HERE

Continuing PNWER’s ongoing work on the issue of invasive species, Matt met with PNWER's regional Congressional delegation’s Appropriations committee members to ensure the continued appropriation of federal matching funds to the four Northwest states (ID, MT, OR, and WA) for watercraft inspection stations and monitoring to combat invasive mussels. PNWER has helped to bring $21 million of federal funds to the region since 2015 for invasive mussel prevention in the Columbia River Basin. This year, reauthorization language has expanded to allow for funding in three new river basins and up to a dozen more states. Matt advocated on the behalf of the PNWER region to ensure that the same level of funding would continue for the four Northwest states, and not be diluted by the addition of the new river basins.

For the upcoming year, PNWER submitted requests to each of the House and Senate appropriators in the region for the continued appropriation of $6 million to the four Northwest states. Meetings with Congressional appropriators included staff from the following offices:

• Senator Steve Daines, MT
• Representative Jaime Herrera-Beutler, WA 
• Representative Derek Kilmer, WA
• Senator Patty Murray, WA
• Representative Dan Newhouse, WA
• Representative Mike Simpson, ID

The issue of invasive mussels is a key topic for PNWER's Invasive Species Working Group. The Invasive Species Working Group will be holding a session at the Annual Summit to discuss this and other topics that are vital to the protection of the region's waterways and industry.  ​

PNWER is committed to continuing federal advocacy for the region on these key issues and many more. Currently, PNWER is focusing particularly on the ratification of USMCA and the removal of Section 232 tariffs and retaliatory tariffs. To see PNWER's work on this issue, visit our ​​​NAFTA Modernization/USMCA Ratification page. 

Today marks the opening of the fifth round of negotiations between the U.S. and Canada on the Columbia River Treaty (CRT) since talks to modernize the Columbia River Treaty regime began in May 2018. PNWER has taken a keen interest in the Columbia River Treaty negotiations and is looking forward to seeing the Treaty modernized for the mutual benefit of the region.  In fact, PNWER has been working with partner jurisdictions over several years to underscore the importance of the CRT. In 2004, the PNWER Executive Committee affirmed the Columbia River Treaty as one of the most important issues for the region.  Since then, much has been done in the region to provide input to the U.S. and Canadian entities leading up to the renegotiation of the treaty.  This past year marked a major effort by PNWER to bring stakeholders and experts together to learn more about the treaty, the negotiations, and the impact on the region.
 
This past July, PNWER organized a Symposium which was held at the PNWER Annual Summit in Spokane, WA. This Symposium was the first joint session to include stakeholders from both sides of the border as well as the chief negotiators from the U.S. and Canada. The Symposium provided the chief negotiators the opportunity to present together and hear testimony from stakeholders. Stakeholders shared the benefits and impacts of the Treaty, focusing on areas including ecosystems, tribal groups, utilities, tourism, agriculture, recreation, and more.  The Symposium also featured legislators of jurisdictions that are in and surrounding the Columbia River Basin who spoke about effects of the CRT on livelihoods in the region. 
Watch TVW's coverage of the CRT Symposium HERE. 
 
Following the Symposium, PNWER and its partners organized two policy tours highlighting aspects of the Columbia River Basin to legislators, policymakers, and stakeholders. The first tour to the Grand Coulee Dam in central Washington showcased hydroelectric power and water storage for irrigation projects in the U.S. and Canada.  Participants heard from several experts including a speaker from the Bonneville Power Administration who illustrated the delivery of power throughout the region. The Chelan County Public Utility District Leadership spoke about operations and the important role the Grand Coulee Dam has in power generation. Tour attendees also heard about the importance of water storage for irrigation to the region’s agricultural community.  

The following day, attendees were invited to a two-day study tour of southeast B.C. During the two-day tour, fifty attendees visited the Hugh Keenleyside Dam as well as the Spicer farm in Nakusp, which is one of the farms inundated when the treaty dams were built.  Columbia River Basin residents and local experts were present during the two days to share their knowledge of how the treaty affects the region’s ecosystems, agriculture, tourism, and community.  ​

The U.S. Chief Negotiator for the Columbia River Treaty, Jill Smail, will lead a town hall in Kalispell, Montana on March 20. The town hall will provide an opportunity for the public to hear about the status of the negotiations as well as to ask questions. For more details on the town hall, visit the U.S. Department of State's website. 

For more information on the Columbia River Treaty, its history, and impact, visit the links below.

Government of British Columbia:
https://engage.gov.bc.ca/columbiarivertreaty/
https://engage.gov.bc.ca/columbiarivertreaty/2018-community-meetings/
February 2019 Columbia River Treaty Newsletter 

U.S. Department of State:
https://www.state.gov/p/wha/ci/ca/topics/c78892.htm
https://www.federalregister.gov/documents/2019/02/27/2019-03353/town-hall-meeting-on-modernizing-the-columbia-river-treaty-regime

UNWARRANTED TARIFFS ARE DISRUPTING TRADE BETWEEN THE WORLD’S CLOSEST ALLIES & LARGEST TRADING PARTNERS AND NEGATIVELY IMPACTING REGIONAL SUPPLY CHAINS
 
WHITEHORSE, YUKON - “We believe that unilateral tariffs between the US and Canada go against the principles of free and fair trade and only harm industries in both countries. When markets are open, and goods are transported freely across borders, the results are economic growth, new businesses and more and better job opportunities for individuals.”, said Pacific NorthWest Economic Region (PNWER) President Larry Doke, MLA Saskatchewan at the PNWER Economic Leadership Forum in Whitehorse, Yukon, on Thursday.
 
Oregon Senator Arnie Roblan, Past President of PNWER said, “Here in the Pacific Northwest, we are stronger by working closely together, and our relationships are intact because of the ongoing partnerships in every major sector of our economy, and in state, provincial, territorial, local, and tribal governments. The US should exempt Canada from any steel and aluminum tariffs, which are causing significant disruption to the largest trading relationship in the world.”
 
The US and Canada’s trading relationship is incredibly important to the Pacific Northwest. The US and Canada have the largest trading relationship in the world, and here in the Pacific Northwest, we benefit from the two-way trade of over USD $541 billion (CAD $630 billion) annually, of which about USD $22.6 billion (CAD $29 billion) is in the Pacific Northwest. Protectionism is seriously damaging the vital economic regional partnership in both of our countries.
 
The steel and aluminum tariffs may cost the US and Canada over USD $11 billion combined, and we could see losses of over 6,000 jobs, according to CD Howe Institute, a Canadian independent not-for-profit research institute fostering economically sound public policies.
As a result of the steel and aluminum tariffs, retaliatory tariffs from Mexico and Canada could cause US Agriculture exports to decline by USD $1.9 billion to these two trading partners.
 
The US tariffs on Canadian steel and aluminum products based on Section 232 US national security investigations are of great concern. As a trusted ally and partner, Canadian steel and aluminum products are used as vital inputs in the Canada-US manufacturing supply chains. Tariffs on these critical inputs are not only making consumer goods expensive in both countries, but also making North American products uncompetitive in international markets.       
 
This cross-border region continues to work closely together every day with our interconnected and interdependent supply chains, and dozens of cross-border cooperative agreements on everything from our shared transboundary watersheds, cross-border airsheds, climate action, cross-border law enforcement, invasive species prevention, forest fire prevention, to defending our shared borders in the 60-year-old NORAD (North American Air Defense) System.
 
PNWER is an example of these interconnections and the ongoing relationships that make our bi-national region stand out in North America as a place where innovation happens, precisely because of the multi-faceted relationships of trust that have been built up for the past 30 years.
 
###

The last week of Summer 2018 will jumble a number of trade actions—starting with today’s announcement of 10% duties on $200 billion of China-sourced goods, the ongoing renovation of the North American Free Trade Agreement (NAFTA), and potential relief from the Section 232 steel and aluminum tariffs—into a goulash that will leave companies wondering what is stalled, in standby mode, or steaming ahead.  To summarize all of these expected developments, Dickinson Wright will hold two free, interactive webinars on Monday, September 24, 2018:
 

• Know the New NAFTA, will commence at 2:00 PM ET and feature Sergio Gomez Lora, CEO of IQOM, and Dickinson Wright discussing aspects of the US-Mexico Agreement (USM) and potentially the US-Canada Agreement (resulting in the USMC Agreement).  IQOM coordinates Mexico’s private sector “next door room” during the NAFTA negotiations. https://www.dickinson-wright.com/events/know-the-new-nafta-webinar-dan-ujczo

 

• Untying the Trying Time of Tariffs—The Product Exclusion Process--will commence at 3:30 PM ET and feature Dickinson Wright regarding the updated Section 232 (steel and aluminum) and China-Section 301 product exclusion processes.

https://www.dickinson-wright.com/events/untying-the-trying-times-of-tariffs-webinar-ujczo
   
Please register directly to the listed websites.  Once registered, the webinars will be available “on-demand” post-September 24. 
 
            Several potential developments nevertheless warrant attention throughout the week:
 

1. Section 301 China Tariffs   USTR issued two announcements on Monday, September 17 relating to the Section 301 tariffs. 

 
Steaming Ahead--USTR announced 10% tariffs on approximately $200 billion of China-sourced goods.  The full list of goods subject to tariffs is available at
https://ustr.gov/sites/default/files/enforcement/301Investigations/Tariff%20List_09.17.18.pdf
 
The 10% tariffs will commence on September 24, 2018.  The tariffs will increase in 2019 to 25%.  More than 5,000 products are on the final list.  USTR removed approximately 300 product lines from the proposed list including consumer electronics (smart watches/Bluetooth), chemicals used in manufacturing, textiles, agriculture products, health and safety products (bike helmets, car seats, sanitary gloves), and several other areas.  Unfortunately, most manufacturing equipment (e.g., tools and dies) as well as a number of goods already subject to significant anti-dumping/countervailing duties remain on the final list.
 

• Will China retaliate as planned against $60 billion in US goods?  President Trump has planned to respond with tariffs against an additional $267 billion in China-sourced goods if China retaliates.  And then the ball will keep on bouncing.  Companies must remain on alert.

 
On a more positive note, USTR announced on Monday a process for product exclusions relating to the second round of Section 301 tariffs (25%) that were finalized on August 16, 2018 (aka “List II”) that will be due on or before December 18, 2018.  Companies should standby to see if USTR announces a similar product exclusion process for today’s tariffs (aka “List III”) in the near term.
 

• While this may be premature, it is likely that the proposed US-China talks that were scheduled to happen in two phases by the end of September are stalled.  China warned that it would not negotiate with a “gun to its head.”  Today’s actions brandished the weapon.  In any event, our perspective on the ground is that we do not see any resolution to the China tariffs prior to the November 2018 midterm elections in the US.  Companies meanwhile must engage on the product exclusion processes.             

 

1. NAFTA to USM/USMC?  As the US moves to “all-in” on China, the need to resolve issues in the North American “backyard” becomes paramount.        

 
Steaming Ahead—The US and Mexico have continued their work toward finalizing the first text of the US-Mexico agreement and the parties reaffirmed their commitment to publically provide the USM text by the October 1st deadline.  The parties intend to sign the USM 90 days later—i.e., prior to the December 1, 2018 transition to the new President of Mexico, Andrés Manuel López Obrador (AMLO).  The US thereafter will prepare the deal for ratification by the next (2019) Congress.
 

• The US and Canada will continue discussions regarding the “C” component of the USMC.  USTR purportedly cautioned Canada that a handshake agreement must be worked out by the close of this week in order to have 7-10 days for preparing the text (prior to the October 1 deadline).  Technical work between the US and Canada continues.  There are reports that Canada’s Minister Freeland will be in Washington, D.C. on Wednesday and Thursday of this week.  Additionally, the new Premier of Ontario, Doug Ford, and his team will be in Washington, D.C. on Wednesday to receive full briefings from their federal Government of Canada counterparts.

 
Key issues between Canada and the US include dairy (although there are reports that a “landing zone” has been reached), Chapter 19 dispute resolution, Canada’s cultural “exemption”, intellectual property rights, de minimis thresholds, and government procurement/Buy America.  USTR purportedly advised that it would not hold another Ministerial meeting with Canada until there was a closing phase/final deal on the table.  Companies should standby to see what happens midweek.  Should Minister Freeland arrive in Washington, D.C., there likely will be results.     
 

• There has been some speculation that Canada may attempt to extend the talks beyond the October 1 Quebec elections, which adds procedural and political uncertainty into the timing and tempo of the negotiations.  Notionally, the bet is that Congress will hold open the deal for Canada’s re-entry.  However, any timeline past October 1 runs the risk of missing the signing of the deal prior to AMLO taking office in Mexico.  Dickinson Wright previously has advised that Congress’ willingness to wait for Canada is not limitless; particularly given the need to finalize the deal with Mexico for US agricultural interests.  Indeed, when one considers that almost two-thirds of the Senate Finance committee has encouraged the US’ positions on Chapter 19 (softwood lumber) and dairy, testing the deadlines adds increased risk that Canada may be left behind.         

 

1. Section 232 Steel and Aluminum Tariffs

 

• Additionally, the immediate consequence of any USM/USMC delay is the inability of the original NAFTA parties to reach resolution of the Section 232 steel and aluminum tariffs.  It is anticipated that should the parties reach agreement by October 1, the US will lift the Section 232 tariffs on Mexico and Canada; consequently, Canada and Mexico will terminate their retaliation/countermeasures.  This is a critical ask of the North American manufacturing and agricultural communities as the US enters a more protracted conflict with China.  Any delay will threaten the North American economy in terms of capacity to continue existing and planned projects.

 

• As will be further explored during the webinar, the US has made changes to the Section 232 product exclusion process that, among other issues, allows for rebuttal/sur-rebuttal to objections made by companies regarding the proposed exclusions.  While the hope is that the Section 232 tariffs on North American goods will be resolved in short order, companies should standby to ensure that progress is made.

https://www.gpo.gov/fdsys/pkg/FR-2018-09-11/pdf/2018-19662.pdf
 
Steaming Ahead-- Companies importing steel and aluminum from other jurisdictions, as well as subject to retaliatory tariffs from those countries, should be aware of these new Section 232 processes.  We do not anticipate the Section 232 tariffs being lifted on any jurisdiction outside of North America, including EU and Japan, before the close of October.     

Following a flurry of activity this week, NAFTA talks between the US and Canada have concluded for the week. This follows off-the-record comments made by Trump, and made public by the Toronto Star on Friday that Trump does not want to compromise with Canada. 

Minister Chrystia Freeland spoke following the conclusion of talks today.

"The United States and Canada have now agreed to negotiate beyond the Friday deadline. While members of Congress could theoretically object, they are unlikely to do so, since most are eager for Canada to remain part of the pact." Talks between the US and Canada are expected to resume again next week. This latest news has created more uncertainty in an already uncertain future for an agreement. But there is still hope that a new free trade deal will include Canada. 
​
On late Friday, the Trump Administration sent Congress a letter formally notifying of their intention to sign a trade deal with Mexico. While the letter only signaled a deal with Mexico, there is still time for Canada to be included. This letter is required for the administration to sign a trade deal under "fast-track" authority, which requires a straight up or down vote by Congress for approval. This letter starts the 90-day clock before the earliest date that a deal can be signed. 

Earlier this week, the US reached a bi-lateral trade deal with Mexico, and Trump announced his intention to rename the agreement from NAFTA. Canada rejoined NAFTA talks after sitting out while the US and Mexico worked on negotiating a trade deal. Canada resumed talks to negotiate bi-lateral and tri-lateral issues and look at creating a tri-lateral deal between the three countries. However, following an eventful Friday, talks have concluded. They are expected to resume again next week. 

Other Links and Resources:
NAFTA 2.0 End Game Briefer - Canada Institute - Aug. 30

What to watch as Canada looks for a breakthrough in NAFTA talks - Financial Post - Aug. 31

Friday isn’t the real deadline for ‘NAFTA 2.0’ - The Washington Post - Aug. 30


COLIN ROBERTSON THE GLOBE AND MAIL AUGUST 28, 2018:  A little more than a year after negotiations began on a revised North American free-trade agreement, a deal looks possible, although big questions remain.
For much of the past two months, Mexican and American negotiators have wrestled with the U.S. demand around the content rules for our most-traded commodity, the automobile. North Americans produce 17.5 million cars or trucks annually. The original U.S. demand of 85 per cent North American content with 50 per cent of that “Made in the USA” has apparently morphed into 75 per cent North American content with 40 per cent to 45 per cent made by workers making US$16 or more a hour.

The devil is always in the details, but Canadian industry and its workers can live with this and, if this gives U.S. President Donald Trump his “win,” then we are on our way to a deal.So, too, with the “sunset” clause. Originally, the United States wanted the new agreement to lapse after five years – something investors said would freeze investment, especially into Canada and Mexico. U.S. Trade Representative Robert Lighthizer reportedly says it will now be 16 years with a review after six years. We can live with that.

On dispute settlement, or Chapter 19, the picture is murky and we will need clarification. The Trump team originally wanted to jettison the binational mechanism, and it appears there will be investor-state provisions, something U.S. industry lobbied hard to retain, and some form of recourse, beyond the U.S. system, for energy and infrastructure. Canada and Mexico need to stand firm. We need recourse from U.S. trade-remedy legislation – countervail, anti-dump and, as the Trump administration misapplies it, national security.
If reports are accurate, there appears to be near-agreement on agriculture (good for Canadian farmers) and on intellectual property (unchanged) but again, the devil will be in the details.

The negotiators were originally aiming for 30-plus chapters of NAFTA but until now only nine had been closed and, of course, nothing is truly closed until it is all done.

So what remains and how might they be resolved? From Canada’s perspective, assuming we can work out dispute settlement, we need to see action on three more items.

• Government procurement: Canada wants to retain open access, but the United States is offering a derisory dollar-for-dollar deal. If we cannot work this out, we should leave it to governors and premiers to work out the kind of reciprocal procurement deal that they achieved in 2010. This could be regional or national; the incentive for both sides is that an outside bidder curbs local price-fixing. This will be important especially if Mr. Trump proceeds with his trillion-dollar “Big Build” infrastructure initiative.
• Labour mobility: We want to update for the digital age the ease of passage for designated occupations. Businesses, especially those with North American supply chains, need this to maintain competitiveness. In the current U.S. environment, this is probably a stretch. We would do well if we can maintain the current list and punt this over to a separate negotiation.
• Dairy access: Mr. Trump continues to single this out. It is time to reform supply management just as we did with our wine industry through the original Canada-U.S. free-trade agreement in 1987 and then our managed trade in grain. Provide adjustment assistance but open up our dairy and poultry industries, which make good products and, like our beef and pork sectors, and now our grains and pulse production, they can be world-beaters.

While Mr. Trump thinks negotiations can wrap up this week, we will likely see fall leaves and probably snow before the deal is done. Legislative ratification, especially in the United States, is an even bigger question mark. It will likely be the next Congress, chosen in November and taking office in January, that will give “up or down” approval to the new accord. It won’t be easy.
​
The coming days – more likely weeks – will be a test of Canadian negotiators. They are a very experienced team and they are up to the task as long as the government has their backs.
This is the bigger question: Can the Trudeau government take the political flak that will inevitably come its way? It won’t be sunny ways. If it can stick it out, the Trudeau government will make as big a contribution to Canadian well being and competitiveness as Brian Mulroney and his Progressive Conservative government did with the original Canada-U.S. FTA and then the NAFTA. It would be no small legacy.
___________________________________________________________________________________________________________
PNWER will continue to monitor events next week as this process unfolds.  Thank you for your interest and support of the greatest trading relationship in the world.  We remain committed to seeing a renegotiated NAFTA that will be a win-win for all three countries, and that will reinforce the strength of the North American integrated economy, and enhance our competitiveness in global markets.