Canada is preparing new talks related to NAFTA’s provisions for the auto sector in hopes of any breakthrough on one of the biggest sticking points in trade negotiations with the United States and Mexico, two government officials said.
Foreign Minister Chrystia Freeland, speaking to reporters outside a cabinet meeting Jan. 11, said the country would bring “new ideas” for “unconventional” U.S. proposals, though she didn’t say which. One of the government officials said she was referring to the auto sector. Both officials said Canada would not give a full autos counter-proposal, and spoke on condition they not be identified.
The NAFTA countries are also “close” to reaching NAFTA agreements on some individual subjects, known as chapters of the accord, Freeland said, describing them as “bread and butter” issues. The most contentious U.S. demands are on automotive content, dairy, dispute panels, government procurement and a sunset clause. Mexico has also signalled there’s room for a breakthrough on autos.
“When it comes to the more unconventional U.S. proposals, we have been doing some creative thinking, we have been talking with Canadian stakeholders, and we have some new ideas that we look forward to talking with our U.S. and Mexican counterparts about in Montreal,” Freeland said in London, Ont., in comments aired by the CBC. “I think if there’s goodwill on all sides, we could have a great outcome in Montreal.”
Officials from the three nations are jockeying for position ahead of the sixth round of talks to revamp the North American Free Trade Agreement. The next talks begin Jan. 23 in Montreal.
The Canadian dollar, the Mexican peso and the stocks of companies that rely on NAFTA slumped Wednesday after Canadian officials said they think the chances are rising that U.S. President Donald Trump will give notice of withdrawal from the pact. A White House official later said the president’s position on NAFTA hadn’t changed.
Flavio Volpe, president of the Toronto-based Automotive Parts Manufacturers’ Association, said progress was made on autos during a mini-round of talks last month in Washington.
“All sides understand each other’s core imperatives much better now,” he said Thursday in an email. “The tone is respectful and everyone appears to actually want a solution that the others will be able to sign off on.”
Freeland didn’t say whether she believes the chances of a U.S. withdrawal notice are rising. Such a notice, which would be given under Article 2205, isn’t binding, meaning it could still be issued and NAFTA still survive.
“The US has been very clear since before the talks started that invoking Article 2205 was a possibility, and I think we need to take our neighbors at their word, take them seriously,” Freeland said. “So Canada is prepared for every eventuality.”
Finance Minister Bill Morneau, speaking at the same event, said Canada has “made preparations and considered every scenario” when it comes to NAFTA. “What we are trying to achieve is an improvement in NAFTA. We know that’s better for Canada and we will continue down that path.”