North American trade talks set to end in March 2018 could continue on into 2019 amid sweeping demands from the United States and resistance from both Canada and Mexico.
Officials initially thought renegotiating the North American Free Trade Agreement (NAFTA) would only take until March 31. Now, that’s looking increasingly unlikely. According to industry executives and other parties, the talks have hit too many stumbling blocks to wrap up in two months, leaving the landmark trade agreement in limbo.
Last week, it seemed that the deal might be scrapped altogether, with officials worried the United States could pull out of NAFTA. Monday ushered in a more upbeat mood after lawmakers on Sunday met with U.S. Trade Representative Robert Lighthizer, who expressed optimism.
“Hopefully they are resolvable,” Rep. Sander Levin (D-MI) told reporters, referencing the issues that have surfaced during the talks.
That resolution is looking less and less like it will come on time. Last week’s meeting in Montreal marked the sixth round of seven planned talks. But finding common ground could take far longer than anticipated.
“We’re worried about it going into 2019,” Brian Kuehl, executive director of Farmers for Free Trade, told the Washington Post.
On the campaign trail, President Trump threatened repeatedly to pull out of NAFTA — which he has called the “worst trade deal ever” — if a new deal favoring the United States could not be reached. Making good on that promise has proven tricky. Opponents of the deal argue it has cost U.S. jobs and lost the country money. By contrast, supporters say it helps the economy, improves international relations, and remains crucial for trade and growth.
NAFTA was signed in 1994, but the deal took more than a decade to take effect. Along with environmental and labor safeguards, NAFTA allows for streamlined trade across the continent, free from tariffs. While conservatives and progressives alike have pointed to NAFTA’s flaws, the deal remains a sweeping agreement binding the three North American countries together. Both Canada and Mexico are invested in keeping NAFTA alive, especially Mexico, which stands to lose the most if the deal collapses. But the White House has made renegotiating NAFTA a challenging process.
Trump wants to both reduce the U.S. trade deficit and revive U.S. manufacturing, creating jobs in the process. The president sees NAFTA as a barrier to those efforts, in no small part due to the $59 billion deficit between the United States and Mexico, as well as Mexico’s role as an exporter: the country sends around 80 percent of its exports over its northern border.
There’s no guarantee that ending NAFTA would bring jobs to the United States and economists argue the deficit isn’t necessarily a bad thing, but the Trump administration isn’t backing down. The United States has asked for a sunset clause, which would require that NAFTA be renegotiated every five years. Washington also wants to largely scrap mechanisms established for trade disputes, along with a massive automobile requirement: that all North American-built vehicles contain 50 percent U.S. content.
In October, Canadian Foreign Minister Chrystia Freeland accused the United States of bringing a “winner-take-all mindset” to NAFTA talks, pushing for alterations that would favor U.S. interests at the expense of its neighbors. Mexican Economy Minister Ildefonso Guajardo has expressed similar sentiments. While Mexico has pushed for talks to wrap before the country’s presidential election on July 1, White House demands are making it hard to find an alternative — something Trump seems unwilling to accept.
“The United States needs to show flexibility,” a senior source told reporters on Saturday, expressing concern over the White House’s firmness.
Canadian resistance to U.S. demands has proven especially challenging to overcome, an impasse that seemed destined to doom renegotiation efforts last week. But with all three parties looking more likely to agree to an extension, talks seem set to continue — potentially for months and months.
“We believe it’s more important to get a quality agreement than to tailor the negotiations to a strict time line,” said Rep. Dave Reichert (R-WA), who met with Lighthizer on Sunday.
News of the possible extension will likely come as a relief to one population in particular: U.S. farmers. Any NAFTA collapse would disproportionately impact agriculture in the United States, potentially costing many Americans their livelihood. Mexico is already accelerating corn imports from Brazil in an effort to offset the possible collapse of NAFTA, costing U.S. farmers in the process. According to Reuters, Mexican imports of at least one product, U.S. soybean meal, fell 29 percent in 2017.
“A trade agreement has to be fair for the United States, but we also want to keep those exports going for the farmer,” 34-year-old farmer Blake Erwin told the publication. “We don’t want to mess up any good things we got going.”