MONTREAL (AFP) – Talks aimed at revamping the North American Free Trade Agreement have advanced slowly, a US trade official said Monday, while holding out hope for breakthroughs in the next round of talks.
Negotiators from Canada, the US and Mexico bore down on key issues in week-long talks in Montreal, averting a feared collapse of the bloc, which binds together nearly 500 million consumers.
With Washington accusing Canada of intransigence, Ottawa changed tack and presented new proposals on several key sticking points.
US Trade Representative Robert Lighthizer slammed a few of those proposed compromises including on the auto sector, but agreed to keep talking.
A next round of NAFTA negotiations has been scheduled for the end of February in Mexico, before moving to Washington.
“We finally began to discuss some of the core issues. So, this round was a step forward. But we are progressing very slowly,” Mr Lighthizer told a news conference.
“We’ll work hard between now and the beginning of the next round (in Mexico at the end of February) and we hope for major breakthroughs during that period,” he said.
Canadian Foreign Affairs Minister Chrystia Freeland said she was “pleased with the progress that has been achieved here this week.”
“Canadians do not view trade as a zero sum game in which one side must lose in order for the other to win,” she said.
“We’ve also said from the outset, last August, that we believe that NAFTA must be updated and improved and that the benefits of trade must flow more broadly to more people in order for that trade to be sustainable.”
Their tone was markedly more optimistic than at the start of the round when Canadian officials expressed concern the US would pull out of NAFTA.
To protect itself from such an eventuality, Ottawa had even announced last week that it was joining the Trans-Pacific Partnership along with 10 other Asia-Pacific countries.
Canada – the second-largest economy in the TPP – had initially snubbed the proposed Pacific trade deal, acting as the main holdout in negotiations after US President Donald Trump decided in early 2017 to go it alone under his “America First” policy.
But with Trump also threatening to pull his country out of NAFTA and time running out to reach that deal, Canada was under pressure to diversify its trade relationships.
In Montreal, Mexico’s secretary of the economy, Ildefonso Guajardo, said progress was made on anti-corruption, customs and trade facilitation, and information and communication technologies.
He also said the parties were close to wrapping up annexes on chemicals and pharmaceuticals.
“Progress has been achieved in several areas of the negotiation, especially in those chapters that aim to modernize NAFTA,” he said.
But, “We still have substantial challenges to overcome,” he added.
Mr Guajardo noted that the parties were moving forward on procedures and controls on the movement of goods across borders that are “much more advanced than… in the WTO and definitely much more stronger than what we’re achieving in TPP.”
Friction, however, remains between Ottawa and Washington. Notably the two sides could not agree on how to calculate their trade imbalance.
Mr Lighthizer cited Canadian trade data that showed it had an $87 billion trade surplus in goods with the United States in 2016, while Ms Freeland rolled out US figures that included both goods and services, for a Canadian trade deficit of $8 billion with the US.
Mr Lighthizer also lashed out at Canada for filing a complaint at the World Trade Organization just before the opening of this round.
In its complaint, Ottawa listed more than 100 examples of wrongdoings it alleged that Washington had committed in its dealings not only with Canada but also with a long line of other trade partners, including China, India, Japan, Mexico, South Africa and the European Union.
This “unprecedented” and “frivolous” action “does make one wonder if all parties are truly committed to mutually beneficial trade,” Mr Lighthizer said.
In regards to rules of origin in the auto sector, which US President Trump wants to restrict to better favour the US, he said Canada’s latest proposal “may actually lead to less regional content than we have now and fewer jobs in the United States, Canada, and likely Mexico.”
In defending Canada’s approach, Ms Freeland said she feared the “dismantling of the cross-border supply chains that have made our auto industry the envy of the world.”