Round 7 of NAFTA talks makes little progress; Trump uses tariffs as leverage
March 7, 2018
Round 7 of negotiations to renew the North American Free Trade Agreement concluded in Mexico City this week, resulting in a few steps forward and a few steps back. Discussions were derailed after President Donald Trump announced tariffs on steel and aluminum, putting the fate of NAFTA back in limbo.
With negotiations taking place behind closed doors, it is hard to tell where NAFTA is headed. U.S. Trade Representative Robert Lighthizer, Mexico Secretary of Economy Ildefonso Guajardo Villarreal and Canada Foreign Minister Chrystia Freeland have all given mixed signals during official joint news conferences. Individually, the tone is quite different.
In a statement, Lighthizer said “In spite of this hard work, we have not made the progress that many had hoped in this round.” Lighthizer explained that of 30 chapters that need to be agreed upon only six have been completed after seven months of discussions.
With a Mexican presidential election in July, U.S. midterm elections in November and upcoming elections in Canada, Lighthizer wants action soon to avoid “political headwinds.” Lighthizer indicated that a trilateral agreement is preferred, but a bilateral agreement can be reached if it comes down to it.
However, Guajardo told Televisa in an interview that NAFTA must remain a trilateral agreement.
Steel and aluminum tariffs complicate negotiations
Last week, Trump announced plans to place a 25 percent tariff on steel imports and a 10 percent tariff on aluminum. Negative reactions were heard internationally and domestically, including Freeland and Guajardo.
In a tweet earlier this week, Trump used the threat of tariffs to persuade Mexico and Canada to reach a NAFTA deal, suggesting the bordering countries will be exempt for the proposed tariffs if they strike a NAFTA deal.
We have large trade deficits with Mexico and Canada. NAFTA, which is under renegotiation right now, has been a bad deal for U.S.A. Massive relocation of companies & jobs. Tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed. Also, Canada must..
— Donald J. Trump (@realDonaldTrump) March 5, 2018
Both Guajardo and Freeland publicly expressed disapproval of the tariffs. Guajardo told Televisa that Mexico is prepared for a tit-for-tat response with a list of goods that it can impose a tariff on for the United States. In response to Trump’s offer of lifting tariffs if a NAFTA deal is made, Guajardo said “that is not the best way to encourage a conclusion of this negotiation.”
Freeland released a statement calling the tariff “absolutely unacceptable.”
“Any restrictions would harm workers, the industry and manufacturers on both sides of the border,” Freeland said. “The steel and aluminum industry is highly integrated and supports critical North American manufacturing supply chains. The Canadian government will continue to make this point directly with the American administration at all levels.”
According to Freeland, the U.S. has a $2 billion surplus in steel trade with Canada and that Canada buys more U.S. steel than any country in the world.
Backlash of the tariffs has been heard within the ranks of Congress and the White House. A spokesperson for House Speaker Paul Ryan said Congress is “worried about the consequences” and is urging Trump to not follow through with the plan.
Despite using national security as the reason behind the tariffs, the Department of Defense has advised a contradictory approach to tariffs, according to Bloomberg.
On Tuesday, news broke that Gary D. Cohn, director of the White House Council, would resign from his position. Multiple reports suggest Trump made decisions, including steel/aluminum tariffs, which went directly against his advice.
An eighth round of negotiations is scheduled for April in Washington, D.C.