Right in tandem with the beginning of the renegotiations of the North American Free Trade Agreement (NAFTA) today, U.S. President Donald Trump has noticeably toned down his rhetoric on just about all of his rowdy campaign promises. This is, of course, very good news to Canada and Mexico.
At least Trump is not claiming that it is the worst agreement ever negotiated by the United States and of course, there’s the $60 billion deficit with Mexico complaint which is a disaster. Instead, U.S. Trade Representative Robert Lighthizer is going at it without a passionate campaign promise rhetoric and aiming to do what the agreement is supposed to do, be a win-win-win for Canada, the United States and Mexico.
The weakest part of the 23-year-old “agreement” is that it is nearly a verbal accord of goodwill by participating nations. It is not a “treaty” that has a solid ground of deep legal compromise. Among Mexico’s negotiating team this change in status is an objective.
But even if Lighthizer’s main goal is to seek ways to bring down the deficit with Mexico, and to a lesser degree with Canada, which is about $11 billion, it seems that all of the trading partnerships created by NAFTA don’t see the deficit in the stern nationalist view Trump has aired to have about it.
With that one hurdle solved even beforehand, the second one on Chapter 19 of trade disputes among merchants solved by a NAFTA panel may also not represent an issue for Mexico. Also known as the “arbitration chapter” it represents more of a problem to Canada which knows that if the many legal problems that arise among trading partners go to U.S. courts, judges will be biased towards the United States. This chapter is a copy of the original demanded by Canada in 1987 when the Canada-U.S. Free Trade Agreement (NAFTA’s predecessor) was signed.
Mexico also holds some gripes against dealing trade disputes in U.S. courts. Good examples of biased court rulings are the avocado ban that lasted from 1914 through 1997 to protect the California and Florida avocado growers associations and finally settled under Chapter 19, as well as the “dolphin safe” ban of Mexican tuna, a conflict that lasted for nearly 20 years. In short, if U.S. courts are to settle trade disputes, there will be local U.S. protectionism.
These will be key discussions from today Aug. 16 through Sunday in which the only participants will be the representatives of the three nations, Ildefonso Guajardo for Mexico, Robert Lighthizer for the United States and Chrystia Freeland for Canada, of course, with their respective negotiating teams.
As for information on the proceedings, in Mexico we’re getting ready for a news blackout as the secretaries of Foreign Relations and Economy, Luis Videgaray and Ildefonso Guajardo, have centralized all the Mexican negotiating strategy even forcing “side room” participants to sign an agreement to keep negotiations secret.
This has caused, reports say, great annoyance among the about 80 business leaders participating in the “side rooms” of the 23 different negotiating chapters who were forced to sign a letter of confidentiality which, many of them did begrudgingly.
Most of the “side room” participants stem out different trade specialties and are represented by Business Coordinating Council president Juan Pablo Castañón and Textile Industry Chamber president Moisés Kalach.
A theme of much gossip has been that even though Trump issued an executive order cancelling the U.S. participation in the Trans Pacific Partnership (TPP) negotiations as soon as he became president, the Mexican negotiating team instructed all negotiators to base their opinions on the existing 23-year old NAFTA text and also on the still on-going TPP negotiations which provide a modern appraisal of free trade concepts as they are deemed today. It will not come as a surprise if the U.S. Trade Representative also bases his views on TPP agreements.
In fact, if the U.S. negotiating team bases itself on the TPP, NAFTA renegotiation will be smooth and without any more foreseeable complications than the ones imposed by Trump and the ones created by new issues such as e-commerce and telecommunications.
In any case, the ground rules to come to a renegotiated agreement, hopefully treaty, will be laid out in the next four days which will be crucial to the success of NAFTA renegotiations.
The concept of failure is not in the minds of any of the negotiators but they have to deliver to Donald Trump a final document he will willfully sign.
In all hopes, there will be no more rhetoric.