Clashes with Canada, Mexico...

Trump's trade chief clashes with Canada, Mexico in NAFTA talks

By DOUG PALMER and ADAM BEHSUDI

The high-stakes NAFTA talks appear to be finally headed on a slow-but-steady forward course, but negotiators remain under pressure to deliver quick results to alleviate the threat of President Donald Trump withdrawing from the pact.

“We believe that some progress was made,” U.S. Trade Representative Robert Lighthizer said Monday during a closing press conference. “We finally began to discuss some of the core issues, so this round was a step forward — but we are progressing very slowly. We owe it to our citizens, who are operating in a state of uncertainty, to move much faster.”

Lighthizer, however, publicly chastised Canada, America's largest trading partner, over filing trade complaints against the U.S. in the international arena. He also called on Canada and Mexico to dig even deeper to produce “major breakthroughs” before negotiators reconvene in Mexico City in late February for the seventh round of talks on revamping the 24-year-old pact.

There is still a very real possibility that Trump could withdraw from the pact unless Canada and Mexico agree to changes to make it better for the United States, despite efforts by the farm and the business community and members of Congress to change his mind about that, he said. In several recent speeches, including last week at Davos, Switzerland, Trump said that he supported free trade but that it must be "fair."

"I don't think the president's view has changed at all. His view is if we can get a good agreement, we should have one," Lighthizer said, adding that the existing pact is "really not a good agreement for the United States."

Lighthizer, a blunt-speaking lawyer who denied reports he engages in “vulgar” behavior to keep opponents off-guard, said Canada deserved some credit for offering new ideas to break the logjam in one of the most difficult areas of the negotiations.

But he also complained a proposal for measuring the amount of U.S., Mexican and Canadian content in automobiles — the so-called rules of origin language — was enormously vague and asserted that it could pave the way for more Chinese or other foreign parts used in North America-made cars, rather than less.

Canada’s informal counterproposal attempted to cater to Washington’s demand that the level required in order for an automobile to qualify for reduced duties under the agreement be raised to 85 percent, from its current 62.5 percent.

Lighthizer blasted it as “the opposite of what we are trying to do,” but Canadian officials took comfort in the fact he said the United States would continue to discuss it.

Canada and Mexico came into the latest round under pressure to engage more seriously, in Washington’s view, on a number of U.S. controversial demands, such as significantly tightening the auto rules of origin in a bid to boost U.S. manufacturing.

Lighthizer’s tough talk also targeted a case Canada recently launched at the World Trade Organization, which he called “a massive attack on all of our trade laws.”

“Of course, we view this case as frivolous, but it does make one wonder if all parties are truly committed to mutually beneficial trade,” he said.

Canadian Foreign Minister Chrystia Freeland, a former journalist under pressure to stand firm against U.S. proposals for radically changing the pact, said she was “pleased” with progress made this week.

“There is still a significant gap on a number of issues, and we are going to be working extremely hard, extremely energetically with our two partners to try to close those gaps,” she said at an individual press briefing.

Freeland rebutted Lighthizer's complaints about Canada's informal auto proposal by noting it had been welcomed by auto companies on both sides of the U.S.-Canadian border.

“This includes ideas to update NAFTA’s rules of origin for autos in ways that would draw new investment to the North American industry — fostering value-added R.&D. jobs, next-generation autonomous and electric cars and North American steel and aluminum production,” she said.

Freeland said the task of renegotiating NAFTA should not cause “the dismantling of cross-border supply chains that have made our auto industry the envy of the world.”

She continued to blast the initial U.S. proposals on rules of origin and other issues as unconventional.

“We should be clear about this: These proposals are unprecedented and in some ways represent an approach quite different from any Canada has encountered before, as a trading nation,” she said.

Mexican Economy Secretary Ildefonso Guajardo, who spoke first at the joint press conference at the end of the round, said the negotiations are at a "better moment" after this round of talks.

“Progress was achieved in several areas of the negotiation, especially in the chapters that aim to modernize NAFTA,” Guajardo said in his statement.

The Mexican trade official highlighted that a new anti-corruption chapter was closed in Montreal. Negotiators also completed work on language for an annex on information and communication technology. They were close to finishing negotiations on annexes for chemicals and pharmaceuticals.

Guajardo said chapters on telecommunications, digital trade and food safety measures are about 90 percent complete and there would be an effort to close them at the next round in Mexico City.

He added that Mexico recognized “the effort put forth by Canada in presenting creative ideas on some of the most important issues of the negotiation.”

“Mexico is committed to intensifying our engagement and will continue working constructively to solve the pending issues,” he said.

The three countries have an informal deadline of finishing by March 31, but many in the trade and business sectors believe that the talks could stretch on for months — even extending into 2019. In particular, the pace could slow as the calendar gets closer to Mexico's presidential elections on July 1 and the U.S. midterm elections in November.

It's hard to predict how much longer the negotiations will take, but at least Canada and Mexico are "starting to realize that we have to begin to talk," Lighthizer said. "I think that’s a reason for guarded optimism, but you know I’m never really very optimistic."

Rep. Dave Reichert, a Republican lawmaker in town to monitor the talks, told reporters on Sunday that Lighthizer describes himself as "a curmudgeon. So when he shows optimism it may not be readily visible to the rest of us."