Auto sector agreement seen as key to unlocking the logjam
Ottawa, ON – Canada’s ambassador to the United States says he expects NAFTA talks to resume in the next few weeks and an agreement on the automotive sector is vital to unlocking the logjam on remaining points.
His comments come as Foreign Affairs minister Chrystia Freeland, Finance minister Bill Morneau and International Trade Diversification minister Jim Carr head to Mexico City to discuss NAFTA. The talks have been on hold since late May awaiting the outcome of the Mexican presidential election July 1st, won by Andres Manuel Lopez Obrador.
“I expect that sometime perhaps the end of the month or early in August we will be back at the table,” said McNaughton, during an interview on CBC’s Power and Politics. “Canada, the U.S. and Mexico were very close to an agreement on autos in the last round. From the U.S. perspective, the problem with NAFTA has been the big trade deficit. The biggest trade deficit is in autos and it’s with Mexico.”
Mexico has been hesitant to accept significant increases in labour and wage standards in the auto sector, something both Canada and the U.S. have been demanding. However, that isn’t likely to happen unless the U.S. backs down on its demand for a sunset clause. The clause demanded by the Americans, would force the three countries to proactively agree every five years to remain in the trade pact. If they do not agree, the deal would automatically be killed. In late May, Prime Minister Trudeau cancelled a proposed meeting with President Donald Trump after the White House insisted the prime minister first agree to a five-year sunset clause.
If there is no agreement from either Canada or Mexico on a sunset clause, the likelihood of an agreement on the auto sector is slim at best and we’re right back where we started despite the best wishes of our U.S. ambassador.