Nafta talks to extend to next year amid clashes

Negotiators struggle to find agreement on thorny provisions in signs of pact's demise

WASHINGTON • Until Tuesday, the North American Free Trade Agreement (Nafta) looked like it might be headed for a quick demise.

Now, it could be headed for a slow, painful one.

The United States, Canada and Mexico said on Tuesday that they would extend Nafta negotiations into next year, with the parties citing "significant conceptual gaps" in how to rewrite the 1994 trade pact.

Negotiators, struggling to find agreement on some of the thorniest provisions of the trade deal, will take an extended break to consult politicians and interest groups before convening again in Mexico City for the fifth round of talks in mid-November.

The trade talks, which were supposed to wrap up by the year's end, have now been extended into the first quarter of 2018, the parties said.

The extension signals the potential demise of a trade pact that, while critical to North American commerce, has come under withering criticism from the Trump administration as a bad deal for US workers.

REGRESSIVE

We have seen proposals that would turn back the clock on 23 years of predictability, openness and collaboration under Nafta.

CANADA'S FOREIGN MINISTER CHRYSTIA FREELAND, on the Nafta negotiations.

The three countries, which will meet again on Nov 17, have been unable to reach agreement on a range of issues, including what percentage of a product should be made in the US and whether the trade pact should expire every five years.

Finding agreement on the outstanding provisions will get even trickier in the coming months, as negotiations collide with political events in all three countries that will only harden each nation's stance.

The Mexican presidential race will begin in earnest leading up to a July 1 election, raising the risk that President Donald Trump's proposals for revising Nafta will become a sensitive topic that Mexican candidates will shy away from supporting.

In the US, legislation will expire in July that gives the Trump administration more extensive authority to negotiate trade deals and then submit them to Congress for a simple up or down vote, without amendments.

Campaigning for mid-term elections will also begin in the US, while Canada will hold provincial elections. Given its current gridlock, US Congress is unlikely to renew the legislation, called Trade Promotion Authority, Secretary of Commerce Wilbur Ross said last week.

"If we lose TPA, I don't think you'll ever see a deal done here," he said. "In general terms, once you get much into next year, nobody is going to be able to get as big and complicated of a deal as this done."

Speaking to reporters on Tuesday after the fourth round of talks, US chief trade negotiator Robert Lighthizer said the "end of the year was never a hard target" and that the previous timeline was putting too much pressure on the process, which requires consultation with Congress, labour unions and industry associations.

Negotiators for Mexico and Canada expressed frustration after the talks concluded.

Canada's Foreign Minister Chrystia Freeland said her country had seen "proposals that would turn back the clock on 23 years of predictability, openness and collaboration under Nafta".

Mexico's Secretary of the Economy Ildefonso Guajardo Villarreal said his country was still striving to bring constructive solutions and not end up "in a lose-lose-lose situation".

The demise of Nafta, a deal that has knit together the North American economy over the last quarter-century, would be a heavy blow to all three economies.

A new study by Impactecon found that the US would lose 256,000 net jobs if it withdrew from Nafta, with the most severe impact on low-wage employment.

Mexico would lose 951,000 net jobs, and Canada 125,000, the report projected.

The outcome could also damage the North American security relationship, straining cooperation to combat money laundering, terrorism, the drug trade and undocumented migrants coming through Central America, the report said.

NYTIMES

A version of this article appeared in the print edition of The Straits Times on October 19, 2017, with the headline 'Nafta talks to extend to next year amid clashes'. Print Edition | Subscribe