National flags representing the United States, Canada, and Mexico fly in the breeze in New Orleans where leaders of the North American Free Trade Agreement met. Mexico, the United States and Canada have begun a second round of talks Sept. 1, on re-negotiating the NAFTA, in Mexico City. The first round of talks took place in Washington in mid-August. File photo by THE ASSOCIATED PRESS

NAFTA: Early sticking points encountered on numerous issues

MEXICO CITY — Negotiators have run into a series of early sticking points on nearly every major element considered key to achieving a new NAFTA agreement, according to sources who describe a dialogue-of-the-deaf-like approach to sensitive issues.

A recurring pattern has emerged during the current round of talks in Mexico City, said sources with knowledge of the discussions: a country will raise a prized priority, only to have another systematically refuse to engage the conversation.

“The tone is negative,” said one source, who added that it’s still early, he remains hopeful a deal can be reached this year, and that obstinacy is to be expected in initial bargaining.

He cited two examples.

One is the Canadians asking for greater access to professional visas. It’s a priority not just for the Canadians, but also for businesses that struggle to send staff across the border. NAFTA’s visa list is outdated and doesn’t include modern digital jobs. The Americans have pushed off that conversation, which risks bumping into that country’s sensitive immigration politics.

Canada has returned the favour. The second example cited by the source involves Canada’s supply-management system. The U.S. has begun raising it as an issue. The U.S. has not yet tabled a formal request with actual numbers but has expressed its interest in loosening Canada’s import controls on dairy and poultry.

He said the Canadians refused to open the discussion on two grounds: one is on the principle that Canada opposes the changes, and the other is that the U.S. has its own agricultural protections, such as tight controls on sugar imports and myriad programs to help struggling farmers.

These are just two examples of an emerging pattern.

“That’s literally the conversation playing out at every table,” said the above source, who asked not to be named given the sensitivity of the discussions. “Almost everything has been raised (even if formal proposal papers have not yet been presented). People respond, ‘We have no mandate, we can’t discuss it.”’

The negotiators broached additional difficult topics Monday. A schedule obtained by The Canadian Press showed the 12 negotiating tables meeting included the groups responsible for working on auto-parts rules, intellectual property, and government procurement and Buy American rules.

The above descriptions were confirmed by other people being briefed on the negotiations. Their opinions differed about whether it was fair to describe the tone as negative simply because countries are slow-walking their most sensitive topics.

“What I’m told is the American negotiators don’t have any flexibility,” said Ottawa trade consultant Peter Clark, who is attending the talks.

“They’re being polite but rigid… What the Mexicans are telling me is that the Americans are being very aggressive, very rigid, they won’t move.”

But the history of international trade negotiations suggests not reading too much into early intransigence.

Former Canadian negotiator Gordon Ritchie, in his memoirs of the original 1980s Canada-U.S. trade talks, expressed frustration that the lead U.S. negotiator repeatedly refused to engage in discussions that were considered politically sensitive and that would ultimately be decided in the end by his bosses in Washington.

That’s what ended up happening in 1987: the thorniest issue involved a new international dispute-settlement mechanism and it was settled in a final-night phone call between Brian Mulroney and Ronald Reagan confidant James Baker.

It remained true in 2015. American officials fumed during the Trans-Pacific Partnership negotiations that the Canadians wouldn’t even talk about dairy until the final phase of talks. At the very end, the Canadians agreed to open the market to 3.25 per cent more imports.

One source said he isn’t overly concerned about the early-round head-butting, which he said is expected, and still believes an agreement is possible by the end of the year. “I am not any more or less optimistic than I was going into this round,” he said.

The one irritant that has publicly surfaced is labour.

That’s partly because Canadian labour leader Jerry Dias has been a ubiquitous presence at these talks — addressing a Mexican rally, meeting with Canada’s chief negotiator for well over an hour in a hotel lobby bar in plain sight of dozens of journalists, and doing frequent interviews and scrums with hordes of news-starved journalists staking out the Mexico City hotel where talks are being held.

Other sources say Canada has several labour priorities: it wants the U.S. to sign a series of international labour agreements it has yet to approve, and wants changes to labour laws in Mexico that would increase the salaries of auto workers.

Dias calls the higher southern salaries a win-win: Mexican workers would benefit, and Canadian and American workers might save some future jobs as more plants remain in the wealthier countries.

Sources say the U.S. considers some of those demands a non-starter. And the Mexican political establishment is passionately lined up against any drastic labour changes seen as being imposed on it by foreign countries.

Dias keeps repeating one mantra in each of these public appearances: that Mexican auto workers, who make a few dollars an hour, should have the opportunity to afford to buy the cars they make.

The Unifor president has revelled in his bad-cop role to the good-cop Canadian government which insists it wants a deal quickly that will save NAFTA.

Dias is telling reporters covering the summit that he couldn’t care less if the agreement survives, that it’s a bad deal for workers everywhere, and is completely indifferent when U.S. President Donald Trump threatens to blow it up as a negotiating tactic.

“When Donald Trump talks about walking away from NAFTA, nobody gets diarrhea,” Dias told a crush of international reporters gathered around him in that hotel lobby.

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