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Capitol Watch: NAFTA Trade Talks Kick Off

By Katie Cross, Associate, Blakey & Agnew

The month of September brings more to Washington D.C. than the official start of fall and the onset of cooler weather. Members of Congress return from their annual summer recess and with them arrive the many staffers and stakeholders who fled the sweltering city during the month of August. But not everyone left D.C. during August – negotiators from the U.S., Canada, and Mexico sat down to begin official talks to update the North American Free Trade Agreement (NAFTA).

President Trump officially notified Congress on May 18, 2017 that the U.S. would be renegotiating NAFTA. This began a 90-day consultation period for the U.S., required under trade promotion authority (TPA), before U.S. officials could sit down at the negotiation table with representatives from our two North American partners. During that time, the parties planned logistics for the process, agreeing to seven rounds of talks and each naming a chief negotiator: John Melle, the Assistant U.S. Trade Representative for the Western Hemisphere, from the U.S.; Steve Verheul, Chief Trade Negotiator, from Canada; and Kenneth Smith Ramos, a representative of Mexico's Ministry of Economy and Director of the NAFTA Office at the Mexican embassy in D.C., from Mexico.

All three countries also used time prior to the start of negotiations to consult with domestic interests and stakeholders to determine priorities. U.S. officials have indicated an interest in reducing the nation's trade deficit within NAFTA, eliminating the dispute-resolution panels, and strengthening rules of origin, among other things. Canadian officials have said they will prioritize strengthening the labor and environmental standards in the treaty and addressing "Buy American" rules, among other goals. Officials from Mexico stated their top goals are updating the treaty to address new energy, digital, and telecommunications developments, maintaining North American agricultural access, and strengthening the competitiveness of the North American partners, among others.

Negotiators wasted no time getting to work after the conclusion of the U.S.' 90-day consultation period, conscious of their short window of opportunity.
They are pressed for time, with Mexico's 2018 presidential election looming. In late-winter or early-spring 2018 campaigning will begin for the July election. Once this starts, President Peña Nieto could begin to lose his power to make concessions as he is increasingly viewed as a lame duck president. Furthermore, should negotiations not conclude before the election, they would most likely be paused until the new Mexican president takes office in January 2019. As President Peña Nieto is

term limited and cannot run for office again, it is likely any new president will bring with them an entirely new set of priorities.

The initial session of negotiations began on August 16 in Washington, D.C. Representatives from each country gathered to discuss rules of origin, among other topics. The first round was sold as a "feeling-out phase" and no firm proposals were made.

Meanwhile, President Trump has continued his threats to withdrawal from the treaty all together. But there is some disagreement on whether or not the president can make such a decision alone or if he would require congressional approval to pull out of the agreement. While some argue the president can simply sign an executive order to withdraw, others say the Constitution gives Congress the final decision by giving them the power to "regulate commerce with foreign nations." Still others say that a withdrawal would require a combination of presidential and congressional actions – with the president pulling from the agreement and Congress passing laws to repeal certain parts of the deal.

Stakeholders from many U.S. industries, including the transportation industry, the manufacturing industry, and the agricultural sector, continue to urge President Trump to keep the U.S. in the pact, saying U.S. consumers and producers alike stand to lose too much from a withdrawal. Leaders from both Mexico and Canada are also emphasizing that they are willing and serious about renegotiating the deal to ensure a better outcome for all three partners.

So as September brings Congress back to D.C., the NAFTA negotiators will head to Mexico City to begin the second round of negotiations, taking place from September 1 through September 5. Then, in late September, negotiators will head to Ottawa, Canada for the third round. The seven rounds are expected to be completed by December but officials have noted that, realistically, talks could extend beyond that month, into early 2018.

Blakey & Agnew, LLC is a public affairs and
communications consulting firm based in
Washington, DC.