New optimism emerging at NAFTA talks in Montreal
Alexander Panetta and Mike Blanchfield, The Canadian Press
Published Saturday, January 27, 2018 12:08PM EST
Last Updated Saturday, January 27, 2018 4:32PM EST
MONTREAL -- The single biggest question looming over the current round of NAFTA negotiations was whether the talks might survive the phase where countries started seriously engaging each other on the more bedevilling sticking points.
Early signs point to: Yes.
Glimmers of hope have emerged in a round viewed as a litmus test for whether these talks might move beyond an early stage marked by finger-pointing, standoffishness and threats of a U.S. withdrawal, and turn into real back-and-forth, give-and-take bargaining.
Several officials said the nearly completed week-long round in Montreal has been more constructive than gatherings of previous months, with countries diving into conversations about auto rules, dispute resolution, and a five-year review clause.
Negotiators closed a chapter on anti-corruption. They also plan to meet at future rounds in Mexico City and Washington over the next two months. And there's hope it won't be quite so hostile this time when the three politicians leading the process meet on Monday.
"We're moving in a slightly more positive direction," Canada's chief negotiator, Steve Verheul, told The Canadian Press while walking between meetings Saturday.
"We'll take that encouragement where we can."
That account was confirmed by multiple people -- including sources from two national governments, several lawmakers from Canada and the U.S. attending the talks, as well as industry stakeholders being briefed.
Dave Reichert, the Republican chairman of a powerful U.S. congressional trade committee, said after a breakfast meeting Saturday with Canadian and American officials: "I'm always optimistic. Even more so after the meeting this morning."
His Democratic colleague Bill Pascrell agreed: "I'm more optimistic than I was six months ago.... The attitude about tearing it all down -- that's changed, and we've become more positive."
Everyone added notes of caution.
The serious engagement has hardly begun; none of the hard topics have been completed; other irritants like dairy have barely been touched; and negotiators are waiting to hear what U.S. trade czar Robert Lighthizer says when he attends the talks Monday.
But at least they're talking and listening -- not insulting and threatening.
That was not guaranteed entering this round, viewed as an important yardstick. There are barely eight weeks left before the current schedule of talks expires, and U.S. President Donald Trump faces a decision soon about whether to extend the talks, pause during national elections in the U.S. and Mexico or start the process of cancelling NAFTA.
"The U.S. side is listening," said Neil Herrington, vice-president of the U.S. Chamber of Commerce.
"One of the key outcomes we want to see from this round is that we start to have serious discussions on (serious) issues because we've gone almost three months now without really talking about them."
Canada presented ideas for a new way to calculate where a car comes from, in sessions between Wednesday and Friday. Sources say the Canadians proposed formulas that would inflate the American content share -- by counting not just traditional pieces, but also the cost of research and intellectual property, where the U.S. dominates.
One person familiar with the talks said the countries are now taking that basic idea and working out various models, gauging their effect on the production of parts and on their own domestic industries.
Canada also suggested an overhaul of the investor-state dispute system under Chapter 11. The Canadian proposal would arguably strengthen the system for countries wishing to keep participating, but allow the U.S. to leave if it wants.
The Trump administration had previously demanded that Chapter 11 become voluntary for countries to participate in. It views the investor-state system as an inducement for companies to outsource to Mexico, by providing additional legal security through a forum to sue for unfair treatment.
The Canadian suggestion: exclude American companies from the system, if the U.S. truly wants out.
All eyes turn to the politicians Monday.
It will be the first group event in three months between the U.S. trade czar, his Canadian counterpart Chrystia Freeland, and Mexico's Ildefonso Guajardo. One-on-one meetings will be followed by a trilateral lunch and public statements.
The trio's last meeting devolved into a spectacularly acrimonious public event. Stakeholders have feared another public jousting spectacle like that one, fretting that continued negativity might implode the talks and make Trump likelier to cancel NAFTA than continue the process beyond March.
But as this round winds down, people are more hopeful.
"Coming in I was a little bit worried -- that this could be the end," said Maryscott Greenwood of the Canadian American Business Council, who was attending the talks.
"Now hopefully this is the end of the beginning, not the beginning of the end."