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September 3, 2018

President Trump Will Sign A Trade Deal With Mexico, With Or Without Canada

After reaching the outlines of a trade agreement early last week with Mexico (see story here), U.S. negotiators restarted talks with their Canadian counterparts in an effort to save the trilateral deal that is known as the North American Free Trade Agreement (NAFTA). The two countries failed to produce a pact by Friday afternoon, but have pledged to restart talks on Wednesday, Sept. 5.

Reuters reported the biggest barriers to a deal are the same ones the countries ran into during three-party talks with Mexico earlier this year: the United States wants more access to Canada’s closed dairy market and Canada wants to maintain a trade dispute settlement system while the United States wants to eliminate it. The negotiators also continue to consider new rules of origin for several sectors and a proposed sunset and review process that was outlined under the U.S.-Mexico agreement.

Neither country has mentioned whether the U.S.’s Section 232 steel and aluminum tariffs and Canada’s retaliatory penalties are part of the current discussion.

U.S. Trade Representative Robert Lighthizer issued a statement after U.S.-Canadian discussions broke up last Friday and Canadian Foreign Minister Chyrstia Freeland held a press conference.

President Donald Trump took a forceful stand, formally notifying Congress Friday evening that he intends to sign the trade pact with Mexico in 90 days. The president’s letter said the agreement could eventually include Canada “if” the country “is willing.” This notification is necessary under Trade Promotion Authority (TPA), which sets forth a process by which Congress considers new trade agreements. Under those rules, also referred to as “fast track,” after the president signs a deal—which, again he intends to do in late November—the White House has 60 days to submit a description of changes to existing laws that would be needed for the United States to comply with the agreement. The International Trade Commission also will analyze the agreement and determine its impact on the U.S. economy. The White House will then transmit the final legal text of the agreement to Congress.

This process (fully outlined by the National Association of Manufacturers here) could take months and is necessary before the House and Senate can hold hearings or vote on the pact.

As Connecting the Dots readers are well aware, the Metals Service Center Institute (MSCI) supports NAFTA modernization and encourages its members to discuss their opinions about the issue with lawmakers. The Canadian government continues to operate a webpage for stakeholders to submit their views. MSCI members in the United States who are interested in weighing in on NAFTA deliberations should contact their representatives in the U.S. House and Senate to let them know how altering or eliminating NAFTA would affect their businesses, employees, and customers. Click here for contact information for every member of the House and here for senators.

MSCI’s comments to the Office of the U.S. Trade Representative regarding NAFTA reauthorization are here. Also of interest: the Congressional Research Service released an overview of NAFTA modernization discussions at the end of July. The report includes a review of all of the issues being discussed.