NAFTA progress: Movement on automotive offers reason for optimism

WASHINGTON — There has been substantial progress in the NAFTA discussions over the last few days, Canada’s ambassador to the US said as he declared feeling more hopeful than he has in some time.

David MacNaughton suggested his newfound optimism is based on two developments: progress on the thorny issue of automobiles, as well as a more general thawing of the frosty tone in earlier talks.

“I must say that in the last two weeks the talks that we’ve had … have been more positive than I’ve seen them before,” MacNaughton told a Washington gathering of the American Association of Port Authorities.

“We still have a long way to go. But certainly the environment is one which is conducive to making a lot more progress in the next short while… I’m optimistic. I am confident that we are going to move forward. … Certainly the environment is conducive to making a lot more progress in the next short while.”

That assessment comes after a discreet, high-level meeting.

Foreign Affairs Minister Chrystia Freeland did not make any public appearances last week when she was in Washington to meet US trade czar Robert Lighthizer, who has said he is hoping for an agreement in principle within weeks.

The US has said it hopes to wrap up that agreement to secure a deal before elections in Mexico and for the US Congress add political uncertainty to the process. It’s hard to know if that can be achieved, said MacNaughton, adding that the talks can’t be dictated by false deadlines.

But he said there really is a good-faith effort to get as close to a deal as possible early next month: “We will meet seven days a week, 24 hours a day to make as much progress as we can.”

There are rumours of a lengthy, two-week round planned in Washington starting in early April. But MacNaughton said the countries have already been meeting, not only in person but also in phone discussions.

He cited two reasons for optimism.

First, on automobiles, he hinted that a controversial US-specific content requirement might still be on the table, but said the Americans have offered some creative ideas that build on a Canadian proposal from two rounds ago.

He said the ideas presented by the Americans would help achieve their main goal of ensuring production in the US, and follow up on a Canadian proposal – the Canadian plan would overhaul the rules for tariff-free vehicle trade and focus not on the quantity of parts from North America but on the overall value of different components.

“They put some interesting ideas on the table too, which were actually quite creative. To which we sort of said, ‘Yeah, we can work with that,”’ MacNaughton told reporters.

“Did we get to somewhere where you could shake hands and say, ‘We’ve got a deal?’ Absolutely not. But it was constructive and useful and even after that meeting there’s been ideas shared back and forth.”

His other stated reason for optimism is the tone of recent talks: “I was encouraged as much by the tone as by the substance.”

The White House on said little in response to a public observation from Prime Minister Justin Trudeau that US President Donald Trump seems to be more enthusiastic about completing a deal.

“The president is always enthusiastic about making a good deal, but that would be the key caveat to any conversation, is making sure that whatever deal he makes is good for Americans, and American workers,” said his spokeswomen, Sarah Sanders.

MacNaughton also shared an anecdote about the Trudeau-Trump relationship.

He described the prime minister attending a meeting of US state governors last summer in Rhode Island, where he also met Mike Pence and he said the vice-president told Trudeau: “’You know, the president really does like you.”’

MacNaughton joked that the relationship is already good, with common collaboration all over the world, on issues ranging from North Korea to Venezuela, but added: “If they really want to make it an even better relationship we’ll agree on NAFTA.”

The Americans will get to tell their side of the story this week. US trade czar Robert Lighthizer has two days of hearings scheduled before the US Congress starting Wednesday, where he is sure to be asked about the NAFTA talks.