The sixth round of negotiations on NAFTA, the North American Free Trade Agreement, is underway in Montréal. Canada and Mexico made news as the talks opened by announcing a separate free trade deal, a newly revived Trans-Pacific Partnership with 11 nations in the Pacific Rim. Withdrawing the U.S. from that deal was one of President Donald Trumps' first acts in office.
As talks began, Mr. Trump said the NAFTA talks are going "pretty well," but he has also said that he will withdraw the United States from NAFTA should he feel that not enough progress has been made. Those two statements are framing discussions by delegates from Canada and Mexico who are bracing for the next move by the U.S.
There's been a clear lack of progress in the previous five rounds of NAFTA negotiations. It may be public posturing to try and trigger an U.S. response, but recent statements by senior Canadian officials do not inspire confidence that a resolution is near.
Rona Ambrose, a member of the Canadian government's NAFTA Advisory Council told Canada's CTV it's not a matter of if, but when the US withdraws from the agreement. "Right now there is just a complete lack of flexibility on the American side. It's basically their way or the highway."
The U.S. wants a new rule that would mandate that cars, shipped duty-free from one NAFTA nation to another, contain 50 percent U.S.-made components. That's not a realistic demand, said Falvio Volpe, president of the Automotive Parts Manufacturers Association.
"There's no movement," Volpe said of the American negotiating team. "So that's not creative," he said.
Attorney Birgit Matthiesen is in Montréal to observe the talks. She runs the cross-border practice at a large Washington DC law firm.
"The ground has shifted for many manufacturers," she said in a hallway outside the negotiation hall at a downtown hotel.
Matthiesen represents clients in the three NAFTA nations. "What is at stake here for is a successful NAFTA that promotes cross-border trade to compete in our own back yard in North America," she said.
Hassan Yussuff heads the Canadian Labor Congress, Canada's largest labor movement. He represents more than three million workers. Yussuff told CBC Radio's weekly political affairs roundup The House that NAFTA uncertainty cuts both ways.
"Given the degree of trade we do with the United States, it's not just us having access to their market. It's also about them having access to our market. So the uncertainty, while we're obviously going to be worried, I think the Americans should not take us for granted," he said.
Attorney Birgit Matthiesen said doubts about NAFTA aren't good for business.
"The negotiations need to come to a conclusion soon because companies in North America cannot make long term plans in an era of uncertainty," she said.
Talks are not scheduled beyond March when a seventh round is set to take place. Absent an agreement, President Trump will have three choices: start the process of canceling NAFTA as he has threatened to do, stay in the negotiations, or hold off for a few months as Mexico elects a new president in July, and the U.S. prepares for midterm elections in November.
