U.S. silence puts NAFTA negotiations in tough spot

As NAFTA renegotiation talks near the midway point, the United States has yet to table formal proposals on several key agriculture issues — missing details that are raising questions about whether negotiators will be able to wrap up talks by the end of the year.

Canadian, American and Mexican trade officials are in the process of trying to renegotiate the North American Free Trade Agreement, a key campaign promise for U.S. President Donald Trump.

Trump has called NAFTA the “worst trade deal” the U.S. has ever signed. He’s threatened to tear up the agreement on a number of occasions if a better deal can’t be reached.

In the months leading up to the NAFTA talks, several Canadian agriculture sectors had found themselves in American crosshairs — the most notable being dairy after Trump personally waded into the matter during a rally in Wisconsin.

The Americans have said they want more Canadian market access. They haven’t said what they want that to look like.

Chief Canadian negotiator Steve Verheul confirmed to reporters Sept. 24 that no formal dairy proposal had been submitted by the Americans.

Verheul is a former chief agriculture negotiator for Agriculture Canada. He served as Canada’s chief negotiator during trade talks between Canada and the European Union that resulted in the Comprehensive Economic Trade Agreement (CETA).

The CETA trade deal resulted in Canadian concessions on the dairy file, with Ottawa agreeing to allow a higher amount of European cheeses into Canada. Canada also agreed to market concessions for dairy, poultry and eggs during the now moribund Trans-Pacific Partnership talks.

The fact no dairy requests have been presented in the NAFTA talks thus far is not entirely surprising. During the CETA and TPP negotiations, more challenging issues, such as agriculture and dairy, were often left to the end because decisions on those files often required the involvement of the political ministers responsible.

Canada remains firm in its commitment to defend its supply management system in the NAFTA negotiations.

Dairy isn’t the only contentious file still awaiting American action.

As of Sept. 25, Canada had yet to receive any formal requests around their concerns on wheat grading or wine access, which are two other files that U.S. Agriculture Secretary Sonny Perdue and Trade Secretary Robert Lighthizer have flagged.

American farmers have been asking for improved grading standards for their grain since the Canadian Wheat Board was privatized in 2012. Under current regulations, American wheat is downgraded to the lowest grade, even if the variety is registered in Canada.

In contrast, Canadian grain exported south to the U.S. is treated the same as American grains and is graded as such.

The Canadian Grain Commission disputes the American claims, insisting American farmers can ship grain north to licensed elevators on “speculation,” in which the buyer determines the price paid based on quality rather than grade.

Verheul told reporters Canada is still waiting to hear from the Americans on areas such as rules of origin on auto manufacturing and an investor state dispute settlement. The three countries have notable differences of opinion in these areas.

The lack of paper passing has raised questions about whether a renegotiated NAFTA can be reached by the end of the year, ahead of the pending Mexican presidential election and American mid-term elections in November.

In Ottawa, neither Verheul nor Foreign Affairs Minister Chrystia Freeland would say whether the current negotiating schedule will be extended past the seven rounds already planned.

“We’ll make good progress the next few rounds, I think, but the end game is always the hardest part and impossible to predict,” Verheul told reporters.

“I think I’ve been wrong most times that I’ve tried to predict when a negotiation would conclude. It’s really hard to say.”

Freeland said trade officials are working “as hard as they can” to wrap up the deal as quickly as possible, given the time constraints. She added it’s not unusual for countries to first try to resolve the files where they mostly agree before tackling the more contentious files.

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