Canada and Mexico appear to be giving ground on the Trump administration’s proposal that an end date be added to the North American Free Trade Agreement.
Mexico has proposed that instead of an expiration date, the NAFTA partners would hold renegotiations every five years on the 1993 trade deal among Mexico, Canada, and the U.S. Canadian officials have reportedly indicated that they are open to that idea.
“It’s in the national interest to review the effects of public policy, and actually that’s why we’re in this fix just now because we’ve spent 20 years without talking about how we perceive the effects of a public policy,” Mexican Economic Minister Ildefonso Guajardo said on Mexican radio Thursday. Reuters cited unnamed Canadian officials saying they would agree to the Mexican official’s proposal provided it does not include an automatic end date should the countries fail to reach consensus.
The fifth round of NAFTA talks began Wednesday in Mexico City. The U.S. has surprised many by pushing for some radical changes to the deal such as adding a five-year expiration provision. The deal would have to be officially reaffirmed by each country every five years or be nullified. That would imperil the deal, which has long had both Democratic and Republican critics in Congress.
Other proposed changes sought by the Trump administration would include allowing member countries to opt out of the investor-state dispute settlement system, allowing countries to favor domestic industries in government contracting, and strengthening the rules for when an item can be labeled as “made in America” or “made in the USA.”
None of the proposals has been embraced by Canada or Mexico, whose economies have benefited from the trade deal. Their resistance has increased concerns that the talks will fail and that President Trump will follow through on threats to pull the U.S. out of the deal. Agriculture Secretary Sonny Perdue said this month that his department was preparing contingency plans should the U.S. pull out.
Guajardo said his country would be fine without NAFTA but conceded there would be some short-term pain. “Without a doubt, Mexico could face a short-term impact because the market is very sensitive to marketing, branding,” he said in the radio interview.
