NAFTA Negotiators Make Progress, Broach Contentious Issues in Latest Round of Talks

NAFTA talks progressed during the sixth round of negotiations in Montreal, but much work remains to be done before the U.S., Canada and Mexico reach a new agreement, trade officials from the three countries said following the conclusion of the round on Jan. 29. Negotiators completed a new anti-corruption chapter, and made “tremendous progress” on chapters on customs and trade facilitation, telecommunications, digital trade, and sanitary and phytosanitary measures, Mexican Secretary of Economy Ildefonso Guajardo Villarreal said during a joint press conference at the end of the talks.

Tentative customs provisions are “much more advanced” than those included in the World Trade Organization’s Trade Facilitation Agreement, and “definitely much stronger than we achieved” in the Trans-Pacific Partnership, Guajardo said. Negotiators also closed a sectoral annex on information and communications technologies, and are close to finishing talks on annexes on chemicals and pharmaceuticals, he said. The sixth round lasted six days, beginning Jan. 23.

Negotiators also “finally began to discuss some of the core issues” in Montreal, marking a “step forward, but we are progressing slowly,” U.S. Trade Representative Robert Lighthizer said in his statement. “Some real headway was made here today,” Lighthizer said. The U.S. views NAFTA as a “very important agreement” and is “committed to moving forward,” he said. “I am hopeful progress will accelerate soon. We will work very hard between now and the beginning of the next round, and we hope for major breakthroughs during that period.”

Canada came up with some “creative ideas” to move forward on some of the “unconventional” U.S. proposals put forward in October during round four of the NAFTA talks (see 1710180024), including a U.S.-origin content requirement for automobiles, the elimination of investor-state dispute settlement and a five-year “sunset” provision, Canadian Minister of Foreign Affairs Chrystia Freeland said during the joint press conference. Canada broached the idea of a “meaningful five-year review process to ensure NAFTA is working well for all partners in adapting to technological change,” she said. Canada also has proposed to exempt the U.S. from ISDS, leaving it as a forum involving only Canada and Mexico, Freeland later said.

But two Canadian proposals appear to have fallen flat, according to Lighthizer’s remarks. A Canadian proposal on automobile rules of origin “is the opposite of what we are trying to do,” leading to “less regional content than we have now and fewer jobs in the United States, Canada, and likely Mexico,” he said. Lighthizer compared another Canadian proposal to “treat the United States and Mexico even worse than other countries if they enter into future agreements” to a “poison pill” that would be “unacceptable to us, and my guess is it is to the Mexican side also.”

In her subsequent press conference, Freeland said Lighthizer was referencing discussions on services trade in his criticism. Canada initially proposed liberalized rules for trade in services, but when the U.S. countered with a proposal to restrict services trade Canada was forced to counter with its own restrictions, she said.

The next round of NAFTA talks is set for the end of February or early March in Mexico City, though dates are still to be determined, Freeland said. After that an eighth round would be held in Washington. Negotiators are “on the brink of closing a number of other chapters” in Mexico City, Freeland said during the joint press conference. Canada is going to “continue to work on a creative approach” to discussions on rules of origin, which is a “core issue” and the hardest to resolve, and has “found a way to talk about” the “unconventional U.S. proposals,” Freeland said. Negotiators “still have substantial challenges” they will face in round seven, “yet the progress made so far” has put the three countries on the “right track” to “landing zones” and the conclusion of the NAFTA modernization process, Guajardo said.