Hearsay has it that the third round of negotiations of the North American Free Trade Agreement (NAFTA) that ended Wednesday in Ottawa has, to quote a news agency, “reportedly been very hostile at times.”
In fact, a participant, Monterrey Institute of Technology professor Manuel Valencia foresaw that “this is the last round in which there are no wounded and we’re in agreement and content with the results. From now on I think it’s going to be uphill.”
And it sure looks like it. First the only document that came out as a finished draft was on the development and small and medium sized business. Yet Mexico top negotiator Economy Secretary Ildefonso Guajardo had raised expectation that they could come up with three or four finished ready to go chapters or “corcheteados” as he usually says in Spanish meaning corked up and wrapped with an official tax (corchete) seal. In any case, it’s one down and 22 to go.
But definitely, the United States dropped a bomb during this round of negotiations. In a most anti-NAFTA attitude Canadian air industry manufacturing company Bombardier was slapped with a 220 percent countervailing duty by the Commerce Department. It clearly sends a message of “toughness” from the Department headed by Wilbur Ross. This was in response to a suit filed by Boeing claiming Bombardier was “dumping” C series transport jets into the world market.
Whatever comes out of the Boeing-Bombardier rift is indeed a case to follow in the next week as it will surely deeply affect the mood in the NAFTA negotiations Round 4 to be held in Washington D.C. next Oct. 11 through 15.
Nevertheless U.S. Trade Representative Robert Lighthizer admitted that “there were advances” in these past talks in new issues such as electronic commerce.
Yet it became clear that Lighthizer is keeping the U.S. intentions for future negotiations in hiding. In fact top Mexican negotiator Kenneth Smith commented to reporters that the United States continues without “placing on the table” its proposals to reduce the approximately $65 billion trade deficit with Mexico and $11 billion with Canada. The deficit theme has been called “spiny” a myriad of times but surely we had foreseen that discussions over it were to start in Round 3. It didn’t happen but surely the countervailing duties tagged to Bombardier gives negotiators a hint on the shape of things to come in Round 4 or 5. Due to the fact that they want to finish negotiations in seven rounds the US is beginning to run out of time to show its hand.
Kenneth Smith said after Round 3 that “a proposal that the US has placed on the table and worries us a lot has to do with perishables. The United States wants to facilitate mechanisms to impose countervailing duties that could affect Mexican exports: that’s an issue we question a lot because we feel it means going backwards.”
Mexico, Smith added, will not yield an inch as it would mean giving the United States to go back to the pre-NAFTA punishing tactics of establishing product quotas and indeed, what else, countervailing duties.
This said, it’s got to be recognized that three rounds of NAFTA talks have produced very little substance but by now the circa 600 experts participating in the negotiations know each other well and all are familiar with the tone to be used in the next final four rounds.