Last week’s failure to reach a North American Free Trade Agreement deal wasn’t a total surprise.
The U.S. and Mexico agreed to a bilateral trade deal Aug. 27, so Canada and the U.S. had only a few days of formal meetings to reach a deal before an arbitrary deadline of Aug. 31, imposed by President Donald Trump. Multiple trade analysts described the deadline as ridiculous and predicted that talks could continue into September and possibly beyond.
Negotiators for Canada were planning to resume talks this week, but it wasn’t clear how negotiators would move forward to resolve key issues.
Foreign Minister Chrystia Freeland wouldn’t talk about specifics of the negotiations during an Aug. 31 news conference in Washington, but she did confirm that Canada’s positions on issues of national interest are “well known.”
“We’re going to continue talking till we reach a good deal,” said Freeland, who told reporters about six times that she would not negotiate in public.
One of the sticking points in the negotiations has been Chapter 19, a mechanism to resolve disputes over dumping and countervailing duties. Freeland has maintained that Chapter 19 is critical part of NAFTA, while U.S. Trade Representative Robert Lighthizer would like to eliminate it because many believe it compromises American sovereignty.
A number of ag industry reps have backed Canada’s stance on the dispute resolution process and the bi-national panels that evaluate trade cases because it’s an important tool to counter American power.
“Chapter 19 is of interest to our sector, just because we’ve gone through situations where it actually helped,” said Gary Stordy, the Canadian Pork Council’s director of corporate and government relations.
Patrick Leblond, a trade expert with the Centre for International Governance Innovation in Waterloo, said Canadian negotiators would possibly offer partial access to Canada’s dairy market to preserve Chapter 19.
The question, though, is what do the Americans want on Canadian dairy?
“How much will be enough?” asked Leblond.
“Is it a tariff free quota of five percent of total milk production? Would that be enough to satisfy the Americans?”
While much of the focus has been on dairy, other sectors in Canada’s agricultural industry are also concerned by the NAFTA negotiations. Trump has threatened to put tariffs on Canadian autos and it’s possible he would also impose duties on canola, pork, beef and Canadian foods.
That possibility becomes more real if NAFTA talks drag on or break down this fall.
The pressure on Canada to make concessions on dairy and get a deal is massive, but there is also immense pressure on American negotiators.
Trump has been in a trade battle with half of the world for most of the last 18 months. He has imposed tariffs on hundreds of goods from China, Canada, Mexico and the European Union.
American farmers and many business leaders are sick of it and want the trade chaos to end.
The U.S. Chamber of Commerce, which represents more than three million businesses, has been a relentless critic of the Trump administration.
The front page of its website features eight stories on tariffs and how they’re hurting manufacturers, exporters and farmers across the U.S.
U.S. farm groups and manufacturing associations have also attacked Trump’s trade policies
There is also political pressure. Senators from northern and agricultural states have clearly stated there’s no trade deal without Canada.
“Senator Pat Roberts is up at the White House all the time, a senator from Kansas, the chairman of the Senate ag committee,” said Bill Tomson, a trade expert with Agri-Pulse in Washington, D.C. “(Roberts) said Canada has to be part of this.”
Trump has made promises to American dairy farmers, saying he will “fix” the problem with Canada. But that promise has limits, given all the other factors at play.
“Getting a deal, I believe, is even more important (than dairy),” Tomson said.
Representatives of Canada, the U.S. and Mexico were scheduled to resume NAFTA negotiations Sept. 6.