Trade Cases

NAFTA Eighth Round Abandoned for Ministerial Meeting

Written by Sandy Williams

A de facto round eight of NAFTA negotiations is about to begin in Washington, D.C., despite the U.S. Trade Representative deciding not to host an official eighth round. Instead, a “ministerial meeting” between Trade Representative Robert Lighthizer, Canadian Foreign Affairs Minister Chrystia Freeland and Mexican Economy Secretary Ildefonso Guajardo will be held along with discussions by chief negotiators, senior political staff and several chapter leads.

Lighthizer is pushing for an “agreement in principle” by mid-April that can be announced by the three heads of state at the Summit of the Americas in Lima, Peru, that begins on April 13.

A final agreement would not be reached until well after Mexican elections in July and possibly after the U.S midterm elections. The push for quick agreement is politically beneficial for the Trump administration, potentially providing a “win” to be used as a talking point in GOP campaigns.

The ministerial meeting will shut Congress out from the consultations that are normally held during trade negotiations.

“USTR can construe a mini-ministerial as news if it wants to build the narrative that the parties are close enough to conclusion to no longer need to conduct regular rounds and now are at a stage where ministers are engaging on final trade-offs,” one source told Inside U.S. Trade.

Several issues remain contentious such as the automotive rules-of-origin. Lighthizer said last month that he would abandon a 50 percent U.S. content requirement if wages equivalent to $15 per hour were counted toward the regional value content of NAFTA-produced autos. The proposed wages are higher than the U.S. minimum wage and would require Mexico to raise worker salaries. Lighthizer still insists on more U.S. content and higher North American content. Earlier, the three countries agreed to add steel and aluminum to the content tracing list.

President Trump threw another wrench into the negotiations by implying in a tweet last weekend that NAFTA and aid to Honduras is in jeopardy if Mexico doesn’t stop the “big Caravan of People from Honduras now coming across Mexico and heading to our “Weak Laws” Border.” Trump’s threat to station military troops at the border added further insult to the Mexican government.

Most economists and sources do not believe U.S. withdrawal from NAFTA is a likely scenario.

Latest in Trade Cases