NAFTA: Canadians believe they see light at the end of the tunnel

US negotiators show renewed interest in Canadian counterparts’ proposals to revise North American Free Trade Agreement (NAFTA) provisions as the United States appears now want to quickly conclude the renegotiation of the agreement.

These two shifts are seen by some as signs that Washington has finally realized that it should be content with modest progress for many of its demands if it hopes to reach an agreement with Ottawa and Mexico in the coming weeks.

At the end of the last round of talks in Mexico earlier this month, US chief negotiator Robert Lighthizer said the time was rushing to reach an agreement before the “political whirlwinds”, the Mexican presidential election in July, the US mid-term elections in November and the provincial elections in Ontario and Quebec do not complicate matters.

For the first time, Mr. Lighthizer had publicly expressed the wish to conclude the NAFTA talks, including the six-month consultation period with the Congress and the vote of the latter on the matter required by law, before new representatives are sworn in January 2019.

This means that the agreement should be concluded during or shortly after the next talks, the dates of which have not yet been formally announced, but which should begin April 8 in Washington and last 10 days.

In private, federal government officials expressed doubt that an agreement could be reached so quickly, especially since the presidential campaign is due to start at the end of the month in Mexico and no candidate can afford to to compromise with US President Donald Trump, who is the political equivalent of kryptonite in the country.

They believe that the only way to achieve such a result would be for the United States to waive many of its controversial claims and accept minor changes in a few important areas, particularly with respect to the auto industry which, according to the Canada, is the starting point for successful renegotiation.

Robert Lighthizer himself recently mentioned the auto sector as one of Washington’s top three NAFTA priorities.

“Hope”

Flavio Volpe, president of the Canadian Auto Parts Manufacturers Association, agreed with the Canadian negotiators.

“I agree with all that,” he said in an interview.

And the fact that the US negotiators finally agreed to meet him two weeks ago is what Mr. Volpe thinks they have come to the same conclusion.

“It was a good meeting, it gave me hope,” he said, noting that the negotiators had refused his invitations in the first six months of the NAFTA renegotiation.

“If you take into consideration the fact that they were ready to welcome me to Washington for a real meeting, I think this is the best sign that we are on the right track to overcome this obstacle.”

During the meeting, Washington negotiators reiterated their initial demand that vehicles should have 85% North American content and 50% US content to be allowed to transit freely between the three countries compared to 62.5 % of North American content currently required by NAFTA. Canada, Mexico and the auto industry rejected this proposal outright.

According to Flavio Volpe, the negotiators also showed some “intellectual curiosity” about Ottawa’s counterproposal on this issue.

Canada suggested that the list of car and truck components that can be traced be updated to include not only steel, aluminum and plastics, but also intellectual property items such as computerized parts that are now found in most vehicles and whose number is expected to increase over time due to the advent of autonomous cars.

Presented in January, this plan was brushed out by Mr. Lighthizer for fear that it will lead to an increase in Asian content in vehicles, which the United States is trying to avoid.

For Jerry Dias, president of Unifor, the union that represents workers in the Canadian auto industry, the Ottawa proposal was not offensive and the three countries would certainly have been able to accommodate it.

However, he felt that it would not be enough to lead to an agreement by the next month without Canada and Mexico giving in to the unacceptable demands of the United States, a scenario that is not in danger. him, to happen.

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