Trade lawyer questions NAFTA negotiating tactics

The North American Free Trade Agreement negotiations are continuing, with several contentious issues to work through. A Veteran international trade lawyer is questioning Washington’s NAFTA negotiating tactics and wants to warn American agriculture groups to keep a sharp eye on how things develop and progress.

NAFTA Negotiating tactics

Daniel Ujczo is an International Trade Lawyer with Dickinson Wright law firm in Columbus, Ohio. He’s concerned about America’s NAFTA negotiating tactics and wants agriculture to keep the pressure on for a positive outcome. (contributed photo)

Dan Ujczo is an International Trade and Customs Attorney for Dickinson Wright Law Firm in Columbus, Ohio. He specializes in Canada-United States trade matters, so he’s keeping an especially close eye on the NAFTA negotiations. There are seven rounds in the discussions, and he noted that the most aggressive positions on trade began to show up during Round 3. He’s worried about the tenor and tone of the Trump Administration during these negotiations.

“We saw the U.S. begin to put forth very aggressive proposals in Round 3 up in Ottawa,” Ujczo said. “The first one was on government procurement, also known as “Buy American,” which basically said the U.S. is going to cut back on the number of government contracts Canada and Mexico are allowed to procure. At the same time, the U.S. wants Canada and Mexico to allow more American participation in bidding on their government contracts.”

He said that’s when feathers first began ruffling. Round 4 saw some aggressive proposals on automotive rules-of-origin, which the U.S. wants to bump from 62 percent North American content to 85 percent. The Trump Administration wants 50 percent of that 85 percent number to come from North America. Ujczo said there are no free-trade agreements in the world that have a nation-specific rule-of-origin like that.

The Canadian supply-management program restricts the amounts of American dairy, poultry, and eggs that get into Canada. Ujczo said Canada’s called it a “red line” that they won’t cross. It’s something to keep an eye on as the U.S. negotiators have already come out against the supply-management system.

“The U.S. is also talking about a sunset provision, meaning NAFTA would automatically terminate after five years unless Congress reauthorizes it,” he said. “Those are things that will cause Canada and Mexico to carefully consider their next moves. There is a very real possibility that the U.S. knows that Canada and Mexico can’t negotiate on issues like that, which means we’re left with one conclusion.”

Ujczo said that conclusion is, in his mind, the U.S. NAFTA negotiating tactics may be designed to try and get Canada and Mexico to walk away from NAFTA. If they don’t, he said the Trump Administration very well could walk away by the end of this year. He feels the Trump Administration doesn’t necessarily want to walk away from the deal, rather, they’re more concerned about “making America great again.”

Here is the complete discussion. Is he right? Is he just being politically motivated? I didn’t get the sense he was. It felt more like a warning to American agriculture to keep making your voices heard.

NAFTA renegotiations present opportunity and challenge

Agriculture has been waiting with anticipation, and some trepidation, for the North American Free Trade Agreement renegotiations to finally begin. Now that the negotiations are free to begin on August 16th, the next logical question is what happens next during the actual NAFTA renegotiations?

NAFTA Renegotiations

Ambassador Darci Vetter, former chief agricultural negotiator at the Office of the U.S. Trade Representative, has a lot to say about the upcoming NAFTA renegotiations, slated to begin on August 16th. Contributed Photo by Craig Chandler / University Communication

Darci Vetter was the lead agricultural trade negotiator for the Obama administration. She has firsthand experience in this situation as she was heavily involved in negotiating the Trans-Pacific Partnership that new president Donald Trump withdrew from. Vetter says the renegotiations are an opportunity to improve the landmark trade agreement, but there are serious pitfalls to watch out for.

“It’s an opportunity to update an agreement that’s been around for 25 years,” Vetter said, “but it’s also an opportunity, if not done carefully, to reopen the terms of trade between three countries that really rely on each other. I’m hoping that the three countries will focus on bringing an agreement that’s dated in some ways up to the standards we need in 2017.”

Vetter said negotiators need to keep in mind that the economies of three separate countries have really integrated themselves based on duty-free access for almost all products in each other’s markets. She doesn’t want the flow of trade interrupted.

Certain segments of NAFTA do need to be updated. She compares it to the recently abandoned Trans-Pacific Partnership. There are chapters in TPP that simply didn’t exist when NAFTA was signed over two decades ago. The digital economy is a big development that needs to be addressed in the renegotiations.

“Look at the digital economy and the importance of the free flow of data,” she noted, “making sure that goods sold over the internet can be easily exchanged between the countries and that people can do business across borders no matter where their brick-and-mortar locations may be. We didn’t have the internet and e-commerce back in the early 90’s.”

The way countries protect intellectual property is more robust than it was in the 90s. There are whole classes of products like pharmaceuticals and crops that just didn’t exist back then. Vetter says we may want to bring the standards for protecting intellectual property from any of the three countries up to today’s standards. She notes there are a lot of good foundations in the original agreement that America can build on to make it a more current agreement.

Here’s the complete conversation with Darci Vetter:

What’s next regarding NAFTA?

American agriculture will have a hard time succeeding without a solid trading relationship with other countries. Now that the Trans-Pacific Partnership is off the table, new President Donald Trump and his administration are now turning their attention to the North American Free Trade Agreement (NAFTA). It’s the first time an administration took a serious look at renegotiating at least parts of the deal since it was signed during the Clinton administration.

NAFTA, Free trade agreement with Canada and Mexico

The Trump Administration still has a goal of renegotiating the North American Free Trade Agreement (NAFTA) with Canada and Mexico in an attempt to make it more favorable for America. (photo from CNN Money)

The National Association of State Departments of Agriculture recently held their winter policy conference in Washington, D.C., and trade was one of the biggest topics of conversation. Nathan Bowen is the Director of Public Policy at NASDA. He says that NAFTA has been a very good thing for agriculture for a long time.

“U.S. agriculture depends on export opportunities for our livelihood,” Bowen said. “With the new administration, there’s a lot of talk about what’s going to happen on the international trade front.”

Bowen says NAFTA has been very important for U.S. farmers and ranchers, who depend on the markets in Canada and Mexico for significant parts of their livelihood. NASDA wants to make sure as the administration looks at redoing NAFTA, agriculture has a place at the table.

“We are working to make sure that agriculture keeps the gains they’ve made under NAFTA,” Bowen said, “and that we do take opportunities that are there to strengthen the agreement. Farmers send a whole range of commodities to markets in both Canada and Mexico.”

He says NAFTA has been good for a whole list of Ag sectors, including beef. U.S. beef exports to Mexico and Canada have almost tripled since the beginning of the agreement. It was a little over $600 million dollars back in 1994, rising to $1.9 billion as recently as 2015.

“The access that U.S. beef has enjoyed in both of those markets has really been important for the industry,” Bowen adds. “The same could be said for corn, with significant gains in that sector, and pork is another really good success story.”

Bowen adds that there really isn’t a timeline for negotiations between the three countries to begin but he’s hopeful it will start as soon as possible so that agriculture will know where it stands with market access to Canada and Mexico.

Here’s the complete conversation with Bowen: