NAFTA talks may get testy on auto, wine and dairy sectors

It looks like the North American Free Trade Agreement negotiations are about to get testy. 


The United States is expected to table a number of contentious demands during the fourth round of NAFTA talks, scheduled for Oct. 11-15 in Washington, D.C.


Apparently, the Americans aren’t happy with the way talks are progressing so far. 


“Honestly, we’ve been a little disappointed with the first three rounds, but we think this is the way these things get going,” U.S. Agriculture Secretary Sonny Perdue said during a recent public forum put on by the Washington International Trade Association. 


So far, he said, the talks have been like a boxing match, with each athlete spending a lot of time wandering around the ring, eyeing their opponent. 


“I think we’re done circling,” Perdue said. “So, we’re going to lay some things on the table in this next round that will be here in D.C. over some serious issues that we hope to get.”


Canada should expect a few punches. 


American trade officials will likely table their demands for more access to Canada’s “unfair” supply-managed dairy and poultry markets. Perdue did not provide details about what those demands might look like.


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Perdue’s home state of Georgia is one of the largest poultry producing regions in the U.S.


Ottawa has said the Canadian government will defend supply management at the negotiating table, a message that’s been repeated by Prime Minister Justin Trudeau, Agriculture Minister Lawrence MacAulay and Foreign Affairs Minister Chrystia Freeland. 


The U.S. did not table any dairy or poultry items in the first three rounds of NAFTA talks.


As well, U.S. President Donald Trump’s administration has formally renewed a World Trade Organization challenge between Canada and the United States over British Columbia wines. The dispute was one of the last actions taken by the previous administration under Barack Obama.


The U.S. argues B.C. regulations amended in April 2015 around the sale of wine in grocery stores violate international trade rules. 


The U.S. insists the rules prevent American wine sales and favour domestic wines. 


Canada disputes those arguments. In the House of Commons Oct. 5, Freeland called the dispute “unnecessary” and said “the United States also has measures in place to promote and protect its own wine industry, and American wine already does very well in Canada.”


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She vowed to defend the industry at the WTO, a dispute that comes at the same time as the U.S. has said it also wants better wine market access addressed during the NAFTA talks. 


Outside of agriculture, Inside Trade reported Oct. 5 that the U.S. wants the rules-of-origin limits for the auto sector amended to raise the North American threshold to 85 percent from 62.5 percent.


The Americans also want a domestic threshold that would mandate a 50 percent domestic content threshold in order to qualify for tariff breaks. The move is designed to try to lure car manufacturers back to the U.S., at the expense of Canada and Mexico’s auto manufacturing sectors. 


The U.S. is bringing forward a protectionist position, one that differs greatly from Canada’s continued global approach to trade. 


Freeland acknowledged recently that the American government’s protectionist mentality is a challenge. 


“It’s an administration that speaks quite openly of the ‘America first’ policy. That’s the reality. That’s the reality that Canada has to deal with and that’s what we’re doing. 


“We will continue to work directly on each separate issue and that’s what we have to do. It’s the only option.”

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Kelsey Johnson is a reporter with iPolitics, www.ipolitics.ca.