The first round of renegotiating the North American Free Trade Agreement (NAFTA) will take place August 16 – 20 in Washington. The United States Trade Representative (USTR) will host a press conference to begin negotiations and will report out daily to the Industry Trade Advisory Committees (ITAC). The mechanics of the rest of the first round remain fluid – some working groups may table proposed text and engage throughout the week, while others may meet only briefly to establish a scope of work. The second round of talks is tentatively scheduled for September 10 in Mexico City.
USTR Robert Lighthizer and Secretary of Commerce Wilbur Ross will play a key role in the U.S. effort along with lead U.S. negotiator Assistant USTR John Melle. Mexico’s delegation will be led by Minister of Economy Ildenfonso Guajardo and Foreign Minister Luis Videgaray, accompanied by Deputy Foreign Trade Minister Juan Carlos Baker, lead negotiator Kenneth Smith Ramos, Salvador Behar, and roughly 40 other members. The senior representative for Canada will be Foreign Minister Chrystia Freeland working with the Canadian Ambassador to Washington, David MacNaughton, Canada’s chief negotiator Steve Verheul, and deputies Tim Sargent and Martin Moen.
The first round will largely serve to identify opening negotiating positions and establish the mechanics for future rounds. On Tuesday night, senior government officials will participate in an opening dinner and begin the talks Wednesday with a press conference. In-depth conversations will take place among the working groups, of which there are more than 20 broken down by chapter (e.g., agriculture, rules of origin, dispute settlement mechanisms, and sanitary and phytosanitary measures). Not all working groups are expected to meet during each round. The U.S. side is expected to introduce some text this week derived from the Transpacific Trade Partnership (TPP) agreement, however, in some cases may depart significantly from the TPP. USTR’s cleared advisors will receive briefings twice a day, members of Commerce’s ITAC Committees will also be consulted, and U.S. negotiators will use the time between rounds for accelerated congressional consultations.
Secretary Ross has signaled his intent to conclude talks no later than early next year, but congressional ratification – if necessary – could easily slip beyond the 2018 mid-term elections and into the 2020 campaign. The Mexican Government has underscored the importance of concluding talks no later than March 2018 to avoid politicizing the negotiation in the run-up to the country’s July 1, 2018 general election for a new president to serve a six-year term, 500 members of the Chamber of Deputies, and 128 members of the Senate.
Recommendation: USTR, which holds the statutory authority to renegotiate trade agreements, will engage actively with industry and remain receptive to receiving proposed text, but senior-level engagement will also be key. We would advise senior level engagement on behalf of U.S. companies throughout the fall, as many of the important decisions will take place at the senior most level of the Administration. State by state engagement with the administration and outreach to USTR’s congressional oversight committees will be equally important, particularly if the U.S. side advances positions that are potentially harmful to U.S. companies. Even companies not actively doing business in Mexico and Canada could be impacted by the renegotiations since the talks will set the tone for all other trade agreements for the duration of the Trump Administration.
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Melanie Kaplan | The Cohen Group
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