With about two weeks left until what may be the final deadline for a new NAFTA this year, Mexico and Canada are signaling there’s a deal to be had — if President Donald Trump wants one.
U.S. Treasury Secretary Steven Mnuchin, speaking in a Fox News interview May 20, said Trump’s priority is getting a good deal, even if it means disregarding “any deadlines” to let current lawmakers approve on it. That would leave a vote to the next Congress, which Trump’s Republican Party may no longer control after November’s midterm elections.
Mnuchin told CNBC on May 21 morning the administration would even be open to a so-called “skinny deal” for NAFTA, which would entail making less significant changes to the pact that wouldn’t require congressional approval. But that’s not the White House’s current objective, he said.
“For right now, we’re focused on a new NAFTA that would go through Congress,” he said.
With a possible U.S.-China trade war “on hold” after negotiations last week, according to Mnuchin on May 20, Trump’s administration has more bandwidth to pivot back to NAFTA. The question is whether all sides are willing to give the “flexibility” that Mexico’s chief negotiator said May 19 is needed to reach agreement on the toughest issues.
“There’s always a chance,” Bruce Heyman, a former U.S. ambassador to Canada under Barack Obama, told BNN Bloomberg TV on May18, saying the “last leg” of trade talks is always tough.
“I think the real question that has to be asked is: Does the U.S. administration want a deal or not? I think there’s a push-pull going on with Republicans.”
Talks lately have focused on the auto sector. The United States wants to rewrite rules so that a greater portion of a car is built in North America, and in the United States specifically. The United States has watered down some of its proposals, and Canada’s envoy to Washington has indicated the sides are very close to an agreement, but the United States and Mexico are said to be at odds over a provision to require a certain share of the vehicle to be built with higher-wage labor.
If an agreement is struck on autos, it is possible the other contentious issues could fall into place and a deal could be reached quickly. If each requires the same attention as the auto file, talks will drag for months or more.
Other thorny topics are in agriculture, a U.S. proposal to dismantle Canada’s system of quotas and tariffs in its dairy sector and on U.S. demands for a five-year sunset clause and to kill certain dispute panels — each of which was cited as a sticking point by Canadian Prime Minister Justin Trudeau last week. Another issue revolves around U.S. demands to curtail the value of U.S. government contracts awarded to Canadian and Mexican companies.
Any country can quit the current NAFTA on six months’ warning. None has given that notice, though Trump regularly threatens to.
U.S. Trade Representative Robert Lighthizer put a damper on talks by issuing a statement late May 17 saying the countries are nowhere close to a deal. There are “gaping differences” on autos, agriculture, intellectual property and other subjects, he said. “We, of course, will continue to engage in negotiations,” he said.
After nine months of negotiations, the nations remain far apart, Mnuchin said May 20. “So whether we pass it in this Congress or we pass it in the new Congress, the president is determined that we renegotiate NAFTA,” he said. “That’s something we’re doing.”
Trudeau said during a U.S. trip last week that there’s a deal on the table that meets the U.S. objectives.
Lower-level officials are continuing negotiations. It is unclear whether the trio of ministers also will hold a session this week. House Speaker Paul Ryan had said May 17 was the deadline to notify Congress of intent to sign a deal, citing U.S. trade law timelines. He’s since extended that timeframe by a week or two, putting the deadline near the end of May.
Mnuchin’s view echoes that of Kevin Brady, Republican chairman of the House Ways and Means Committee, who said May 18 that he hoped talks continue in good faith “whether that means a vote in Congress this year or next.”
Negotiators have so far completed nine of about 30 chapters of a final deal, Mexico’s chief NAFTA negotiator Kenneth Smith Ramos said on Twitter on May 19. “The last mile will require flexibility from all 3 Parties in order to find the balances that may allow us to close the negotiation,” he wrote.