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CME NAFTA Renegotiation Update - Round Two

Published by CME Manitoba on September 13, 2017

The second round of NAFTA 2.0 negotiations concluded in Mexico Cityon Wednesday September 6th. CME has been working closely with government officials and participating in consultations representing the needs of our members. Based on our involvement and intelligence gathered to date, here is what you need to know on the negotiations so far, and where they will go next.

All is normal: Negotiations of free trade agreements typically start in a similar way to how NAFTA 2.0 has started. The biggest difference this time is the media attention, which can lead to changed perceptions. Like all negotiations, each country has outlined its strategic objectives, and in some cases put specific demands on the table for the other countries to consider. As reported in earlier member briefings, the Government of Canada has put on the table six strategic objectives, most of which align directly with what CME and our partner organizations have requested. 

What has been tabled: During the first few rounds, countries will put on the table a variety of proposals for consideration so that each party has a good sense of what the other is after. These proposals will be based on input from industry groups like CME as well as from experience from other FTAs. In the early stages, aside from sharing initial draft text for the negotiating demands, and ensuring the other parties understand the ask, very little is negotiated. Most of the very contentious issues are not discussed in any detail at this stage, for example US demands to end supply management in Canada or to change rules of origin classifications. It is expected that in the 3rd and 4th rounds, more specific proposals on the big issues will be tabled.

The big challenges: While negotiators have not begun to discuss the specific details of many proposals, it is clear that several major hurdles to a NAFTA 2.0 are emerging. The biggest is the gap between the apparent political demands of the US Administration and the realities of negotiations, which will need to be addressed as negotiations move forward. For example, high level demands from the US to have US specific rules of origin on products in addition to NAFTA wide rules of origin have been flagged as a non-starters by Canada and Mexico. Similarly US demands to eliminate Chapter 19 dispute resolution have been rejected by Canada and Mexico, but no alternative has been offered.

The next steps: The next round of negotiations will take place in Ottawa during the week of the 24th. The following rounds are expected to take place roughly every three weeks rotating between the three countries. Before negotiations began the US administration had hoped for a quick renegotiation to conclude by the end of 2017, however that goal was exceptionally aggressive. Given the current pace of negotiations, it is likely that they will continue into 2018 before a new deal emerges.

Stay involved: CME continues to actively participate in several government committees and is advising government on the negotiations as they continue. If there are issues your company wants addressed in the negotiation, please do not hesitate to contact us directly. In addition, we will continue to hold updates for members after each round of negotiations to provide timely and relevant updates. 
To receive ongoing updates please visit CME’s NAFTA resource page here and to participate in our member briefings, please contact lacy.gillott@cme-mec.a.

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