NAFTA round ends; Canada, U.S. share different perspectives

The tone was friendlier and U.S. Trade Representative Robert Lighthizer almost chuckled, but it’s clear that Canada and the United States still have different perspectives on the North American Free Trade Agreement.

At a press conference in Montreal this morning, Lighthizer and federal Foreign Affairs Minister Chrystia Freeland politely shared their thoughts on the state of ongoing talks to re-negotiate NAFTA.

Lighthizer, who spoke before Freeland, said trade between countries in a free trade agreement should be balanced. Unfortunately, it’s clear to him that Canada has a trade surplus in goods with the U.S.

“Using Canadian statistics, Canada sold the United States $298 billion, US dollars, in 2016,” he said. “We sold Canada $210 billion dollars in goods.”

That represents an $88 billion surplus for Canada, which equals about 5.7 percent of Canada’s GDP.

Given the size of Canada’s trade surplus, isn’t it reasonable for the U.S. to wonder if NAFTA is working as it should, Lighthizer asked.

“I think there is some misunderstanding here that the United States is being unfair in these negotiations. That is not the case…. Would Canada not ask the same question if the situation was reversed?” said Lighthizer, who directed most of his comments at Canada during the news conference and rarely mentioned Mexico

“We need to modernize (NAFTA) and we need to re-balance.”

Freeland, who also struck a friendly tone, took issue with Lighthizer’s position and his trade figures.

“Canadians do not view trade as a zero sum game, in which one side must lose in order for the other to win.”

She presented data showing that the U.S. actually had an $8 billion trade surplus with Canada, when all goods and services are counted.

“Out of total bilateral trade worth $634.8 billion U.S. dollars. That’s close to balance, but it’s a small deficit for Canada.”

Freeland presented other figures, saying the U.S. has a trade surplus with Canada of $35.9 billion in manufactured goods.

“We are the largest export market for two-thirds of U.S. states,” she said.

Freeland then made a few comments that were less than polite as she criticized the U.S. on its negotiating tactics and its logic.

She said the U.S. economy is thriving and it makes little sense to rip up an agreement that provide 14 million jobs to Americans because of trade and investment between Mexico, Canada and the U.S.

“From Canada’s perspective, our job here (at the negotiations) is to … foster conditions for growth that benefit Canadians, Americans and Mexicans,” she said. “Our job is not to weaken North American competitiveness, it is to strengthen it.”

She went on to say that the U.S. proposals for modernizing NAFTA, such as changing rules of origin around automobile manufacturing so half of all content comes from the U.S. and eliminating a mechanism to resolve disputes between the nations, were “unconventional.”

“Let me be clear about this, these U.S. proposals are unprecedented and in some ways represent an approach quite different from any that Canada has encountered before.”

Freeland and Lighthizer did offer up different visions of trade and distinct facts, but they both said that negotiators did achieve some accomplishments at the Montreal talks.

“We believe that some progress was made,” Lighthizer said. “We closed one chapter … the chapter on corruption. And we made some progress on a few others.”

The next round of negotiations will be held in Mexico.


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