Canada and the United States would fall back upon a decades-old bilateral free trade agreement should current renegotiations of the North American Free Trade Agreement collapse, Canada’s chief negotiator told MPs ...— adding it likely would require “a presidential proclamation” to bring the suspended free trade agreement into effect.
The United States and Canada would also “probably both have to make some regulatory changes in order to comply,” Steve Verheul told MPs.
Verheul was addressing the House of Commons trade committee [on December 4], providing an update on ongoing efforts by Canadian, American and Mexican officials to revise the 23-year-old NAFTA trade deal. Five rounds of negotiations have concluded. A sixth round is planned for January 23 – 28 in Montreal. An inter-sessional period of talks between officials from all three countries is planned for next week in Washington.
Canadian officials are “struggling” to figure out what the United States needs to secure “a win” at the NAFTA negotiating table, Verheul said...
“Our concern is what the U.S. has described as their overriding objective … to take benefits enjoyed by Canada and Mexico and reduce those … so that the U.S. benefits more and Canada, Mexico benefit less,” he said. Canada and Mexico aren’t interested in a trade agreement with that outcome, Verheul told MPs.
That means the Americans pulling out of NAFTA remains a possible outcome...
Canadian officials are actively working on possible “contingency” plans on a sector-by-sector basis to cope with the “worst case scenario.”... Sectors that would be particularly hard hit, Verheul said, would include footwear and textiles.
...Canada and Mexico also have agreed to continue forward with a NAFTA-like bilateral trading environment if the U.S. withdraws...
Verheul said the United States has tabled a number of “extreme” proposals which Canada has deemed “unworkable.” Those include drastic changes to rules of origin for the auto industry, which Verheul told MPs would render the North American market “less competitive” than its international counterparts. The United States also wants to eliminate NAFTA dispute resolution sections and has demanded a dollar-for-dollar approach on the government procurement file...
The United States also has called for the elimination of all tariffs on Canadian dairy, egg and poultry exports without proposing similar changes for American exports like dairy and sugar, which also face higher tariffs. Verheul said Canada has rejected that proposal outright...
This was excerpted from 4 December 2017 edition of iPolitics.