Prime Minister Justin Trudeau said the three countries party to the NAFTA trade pact haven’t signed off on a new agreement because of one significant sticking point: the Americans’ demand for a sunset clause.
Speaking on stage at an event at the Economic Club in New York today, Trudeau said the three countries are close to putting pen to paper on a renegotiated NAFTA and there is “a good deal on the table” right now — particularly for the automotive sector, an industry that accounts for a significant portion of cross-border North American trade.
“I’m confident in saying that we have found a proposal that is broadly acceptable to the three partners and our industries on the auto side of things,” he said.
A spokesperson for Foreign Affairs Minister Chrystia Freeland told CBC News that the minister, who has led Canada’s efforts on this file, will fly to Washington, D.C. again today for meetings with “key stakeholders.”
Despite sending a positive message on the state of negotiations, Trudeau’s optimism on the auto file was later questioned by Ildefonso Guajardo, Mexico’s economic minister.
“Congratulations @JustinTrudeau for a great interview at @EconClubNY – but a clarification is necessary: any renegotiated #NAFTA that implies losses of existing Mexican jobs is unacceptable,” Guajardo said.
Congratulations <a href=”https://twitter.com/JustinTrudeau?ref_src=twsrc%5Etfw”>@JustinTrudeau</a> for a great interview at <a href=”https://twitter.com/EconClubNY?ref_src=twsrc%5Etfw”>@EconClubNY</a> – but a clarification is necessary: any renegotiated <a href=”https://twitter.com/hashtag/NAFTA?src=hash&ref_src=twsrc%5Etfw”>#NAFTA</a> that implies losses of existing Mexican jobs is unacceptable.
“Mexico has engaged constructively in the #NAFTA negotiations. Our proposals intend to rebalance 3-way trade by creating new business opportunities & jobs for Mexico, Canada, and the United States.”
Mexico has engaged constructively in the <a href=”https://twitter.com/hashtag/NAFTA?src=hash&ref_src=twsrc%5Etfw”>#NAFTA</a> negotiations. Our proposals intend to rebalance 3-way trade by creating new business opportunities & jobs for 🇲🇽🇨🇦🇺🇸
In a press conference after his luncheon Q&A, Trudeau acknowledged that nothing has been agreed to yet on the auto front.
“There are some very tangible proposals on the table including around auto proposals put forward by Canada and Mexico that are meaningful … and line up with some of the longstanding bargaining positions of the U.S.,” he said. “There are reasons to be cautiously optimistic.”
U.S. Trade Representative Robert Lighthizer, who is negotiating for the Americans, has been pushing hard for a sunset clause. Adding it to NAFTA would mean the deal would have to be renegotiated every five years. It’s something Canada and Mexico are very reluctant to agree to because of the economic shocks that come from uncertainty about NAFTA’s future.
“We don’t feel a deal with a sunset clause is much of a deal at all,” Trudeau said.
And, in a message meant for President Donald Trump personally, Trudeau explained Canada’s opposition in real estate terms.
“To put it in a frame that maybe someone who … did a lot of real estate deals might understand,” he said, “if you agree to build a building on a particular parcel of land, but only hold the lease for five years, and after five years you actually lose the lease, you might not be interested in investing in the building that’s going on that land.”
A high-level Canadian delegation is in Washington today looking for a path forward to a quick agreement.
Brian Clow, Prime Minister Trudeau’s point man for American affairs, is among several Canadian officials in D.C. for talks with their counterparts.
Canada’s ambassador to Washington, David MacNaughton, said there are high-level conversations going on about what happens next.
“We will do an assessment of where are we, and is there a chance of pulling all this together in a fairly rapid fashion or not,” MacNaughton said in an interview with the Canadian Press.
This comes as the countries face a looming deadline for getting a deal in the short term.
Any agreement would have to be voted on by a future U.S. Congress after the midterm elections and may need the assent of Mexico’s next president.
But MacNaughton said he believes it’s still possible and desirable to achieve an agreement soon.
“We’re pretty close,” he said. “There are still some tough issues to deal with, but do you really want to kick this down the road and miss the opportunity to … pull all that good work that’s been done together and get something formally done?”
The U.S. objective in these talks was to reduce its trade deficit, he said.
“Eighty per cent of that deficit has to do with autos. We’re that close on autos,” he said, illustrating with a thumb and index finger held close together.
“If you want to get this over the finish line, we’re a long way towards getting it there. So let’s wrap it up and get it done.”