Newspaper article The Canadian Press

NAFTA: A Summary of Where Talks Stand

Newspaper article The Canadian Press

NAFTA: A Summary of Where Talks Stand

Article excerpt

NAFTA: A summary of where talks stand

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MONTREAL - Here's a summary of where the NAFTA talks stand after a week-long round in Montreal. The round officially concludes Monday with meetings between the political ministers leading the negotiations for Canada, Mexico and the U.S.

Chapters: A chapter on anti-corruption measures was concluded in Montreal. Officials from one country say chapters on telecommunications and digital trade are also more than 90 per cent done.

Autos: The countries have begun a real dialogue. Previous rounds saw acrimony over a U.S. demand that 85 per cent of a car's parts be North American -- a major increase from the current 62.5 per cent requirement -- and 50 per cent be American to avoid a tariff. Some in the auto sector called that idea so unworkable it would induce companies to move to Asia and simply pay the import tariff. At this round, Canada proposed a major overhaul: include the value of intellectual property in the calculation, instead of just parts, thereby inflating U.S. numbers while being less disruptive to the industry. The countries are now analyzing how such formulas could work, and the idea has been turned over to political decision-makers in the U.S. and Mexico for their input.

Chapter 11: The Americans want it to be voluntary for countries to participate in the investor-state system, which allows companies to sue countries for discriminatory treatment. The U.S. has suggested it might want to opt out of the system, arguing that it provides assurance for investors outsourcing operations to Mexico. This is not to be confused with the Chapter 19 system, which handles fights over punitive duties, on cases such as softwood lumber -- the Americans want that gone entirely. At this round, the Chapter 19 irritant was largely avoided. But the Canadians and Mexicans worked out a proposal on Chapter 11. Their idea would essentially sideline the Americans, creating a new investor-state system that applies only to them. Under the Canadian proposal, backed by Mexico, the U.S. would be prevented from participating in or developing the rules of the new system: "We basically said to them, 'If you want to opt out that's fine, you're gone,''' one non-American said.

Sunset clause: The U.S. has proposed a clause that would automatically terminate NAFTA every five years, unless renewed by all three countries. The other countries called that unworkable, and a constant chill on investment, akin to placing an automatic-divorce clause in a marriage license. In November, the Mexicans proposed turning this termination clause into a review clause -- meaning it would force regular reviews of how the agreement is working, but not threaten automatic termination. They pointed out that NAFTA already has a termination clause, which countries are free to use. …

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