NAFTA discussions could bring 'drama', Canadian official warns

The United States, Mexico and Canada will meet on Wednesday for the first round of discussions to renegotiate the North American Free Trade Agreement (NAFTA), and on Monday Canada’s trade minister outlined the country’s goals for those discussions in the most detailed way to-date.

“Canada the United States and Mexico have a powerful shared interest in reaching a mutually beneficial agreement,” Foreign affairs minister Chrystia Freeland said during a speech in Ottawa. “Strong economic fundamentals are a compelling agreement for bolstering what works and improving what can be made better.”

Freeland said Canada is looking to make NAFTA more progressive by improving labor safeguards, emphasizing gender and indigenous rights and strengthening environmental protections. She said Canada is on the same page as the United States when it comes to reducing unnecessary red tape and seeking a freer market for government procurement.

However, Freeland was resolute about one item that could cause problems between the United States and its neighbor to the north: maintaining a settlement dispute mechanism.

“Just as good fences make good neighbors, strong settlement dispute settlement systems make good trading partners,” she said.

In its outlined goals released last month, the U.S. declared its intention to eliminate NAFTA’s dispute-resolution panels. In theory, that could allow the U.S. to implement tariffs more easily. Earlier this year, the U.S. Commerce Department slapped punitive tariffs on Canadian softwood lumber producers.

Freeland, while hoping for a “happy ending," cautioned Canadians about periods of “drama” and “excitement” throughout the negotiations. The first round begins on Wednesday in Washington, D.C., and Mexican officials have said the plan is to hold seven rounds of talks at three-week intervals, according to Reuters.

Canada has an expressed interest in making “what is a good agreement, even better,” Freeland said. She compared the benefits Canada has received from participating in NAFTA to the country “receiving a $20 billion check each year” since the trading pact went into effect in 1994. Freeland said the U.S., Mexico and Canada account for one quarter of the world’s GDP with a $19 trillion regional market.

Meanwhile, President Donald Trump has called NAFTA “the worst trade deal” the U.S. has ever approved. Among the Trump administration’s goals for the NAFTA renegotiation are cutting the U.S. trade deficit with Mexico, encouraging greater labor market integration, improving market access for American manufacturers and farmers, as well as eliminating unfair trade practices.

According to the White House, since the implementation of NAFTA in 1994, the U.S. trade balance with Mexico has shifted from a surplus of $1.3 billion to a $64 billion deficit in 2016.