Washington, DC – U.S. Trade Representative Robert Lighthizer today issued the following statement regarding the status of trade negotiations with Mexico and Canada:
“Today the President notified the Congress of his intent to sign a trade agreement with Mexico – and Canada, if it is willing – 90 days from now. The agreement is the most advanced and high-standard trade agreement in the world. Over the next few weeks, Congress and cleared advisors from civil society and the private sector will be able to examine the agreement. They will find it has huge benefits for our workers, farmers, ranchers, and businesses.
“We have also been negotiating with Canada throughout this year-long process. This week those meetings continued at all levels. The talks were constructive, and we made progress. Our officials are continuing to work toward agreement. The USTR team will meet with Minister Freeland and her colleagues Wednesday of next week.” (link)
Under the original 1993 terms and Chapter 22 of the Implementation Act, Lighthizer notifies congress that trade parties have modified the terms; this is the Section 2202 notification of modification. Ninety days after the date of the notification the U.S. and Mexico can sign the new terms of agreement; congressional approval is not required. [Canada can still join the U.S-Mexico agreement but they need to act fast.]
If Canada refuses to join the agreement Lighthizer will follow-up the 2202 modification notification with a Section 2205 notice dissolving the U.S. from the 1993 agreement with Canada; the dissolution is official six months from the date of notification.
During the 6 month period, before official dissolution, the U.S. and Canada can enter into new negotiations for a separate bilateral trade agreement.
If no agreement is made in the six months, prior to the dissolution date, then the terms within an older 1973 trade agreement between the U.S. and Canada take effect. However, it is more likely a new U.S-Canada trade agreement will be made within the six month NAFTA dissolution period as Canada would not want to revert back to a trade agreement almost fifty years old.
President Trump has executed this plan brilliantly. The U.S. and Mexico have formed a manufacturing alliance based on common sense principles that are mutually beneficial to both countries. Incoming Mexican President Lopez-Obrador retains much of the current investment and gets a significant win for his labor policies (a promise kept). President Trump gains increased U.S. investment and the NAFTA loophole is closed (a promise kept).
Both the U.S. and Mexico have removed trade barriers, eliminated tariffs and subsidies and established mutually beneficial terms of commerce.
However, Canada cannot -and will not- remove protectionist trade barriers (telecommunications and banking); will not eliminate protectionist tariffs (dairy); will not remove subsidies on Lumber and Aeronautics; and will not accept rules of origin in manufacturing that would remove their ability to exploit cheap Asian and Chinese parts and assemble them in Canada.
In essence Canada does not want to open their government controlled markets to competition and pesky capitalism; and they also don’t want a restart of heavy industry.
So it is likely President Trump and Robert Lighthizer will attempt a separate bilateral deal; and if not possible, Trump will place a 25% tariff on all Canadian made automobiles thereby bringing the cross-border auto manufacturing industry back to the U.S.
Oh well… we tried. Dealing with those duplicitous Canadians gave me a heart attack.