After campaigning and complaining about NAFTA for two years, Donald Trump is about to start doing some explaining: the U.S. president is poised to release a list as early as Monday revealing how he wants to change the deal.
American law requires that the administration publish a list of its objectives entering trade negotiations. The reason this could happen any day is because the administration hopes to start negotiations around Aug. 16 and the law requires this list be posted online 30 days in advance.
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Expect the Canadian government to say little in response to the list.
“I can’t imagine that we would start negotiating before the negotiations actually start,” Prime Minister Justin Trudeau said Friday.
“We’re going to be responsible about this, to be thoughtful and responsible in how we engage the administration.”
That tight-lipped approach stems from the Canadian government’s overall strategy: Make the Americans lay out their cards first, given that they asked for these negotiations and in the parlance of trade talks are the “demandeur.”
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The U.S. has signalled wildly conflicting approaches.
Trump keeps threatening to rip up the trade agreement in the absence of a major renegotiation. His vice-president just delivered a speech exuding collegiality and promising a new NAFTA that would be a “win-win-win.”
The signals to Congress have been equally contradictory.
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In a leaked draft of a letter to lawmakers, the administration showed at a desire to play hardball and seek changes that would be deemed non-starters by the other countries. It later released a bare-bones, modest version of that letter.
It was with this letter that the Trump administration formally declared its intention to enter trade negotiations with Canada and Mexico. Those mixed messages are due in part to philosophical differences within Trump’s team about how aggressive to get on trade.
A veteran of U.S. trade negotiations suggests this upcoming notice will fall somewhere between the two versions of those letters to lawmakers: more detailed than the final version, less expansive than the draft.
“It will be more specific but I think still broad-brush bullet points on what they want to accomplish,” said Welles Orr, a senior U.S. trade official under George H.W. Bush and Bill Clinton.
“So no surprises. I don’t expect we’re going to see anything that pops out as ‘Oh, wow, we didn’t see this coming.’ So I think it’ll be kind of perfunctory.”
Here’s what he expects in the new NAFTA: modern chapters on digital commerce, modelled on those in the now-dormant Trans-Pacific Partnership; changes to auto-parts import rules that all three countries can live with; and a bruising fight over dairy.
He predicts the dairy issue will come down to the final wire: “That’s the hotbed issue that’s hanging out there that will be the last issue to get resolved. But if that’s resolved, I don’t see a whole lot of contention on the Canadian side.”
The reason the administration has to publish this list, and release letters to Congress, is because of a deal between the legislative and executive branches of the U.S. government, enshrined in what’s known as a fast-track law.
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Under the terms of that deal, U.S. lawmakers relinquish their power to amend an international agreement, as is their right under the U.S. Constitution; in exchange, lawmakers are consulted throughout the negotiating process.
That process includes public hearings – on Tuesday, for instance, the House of Representatives committee in charge of trade will hold a hearing on NAFTA, how it’s worked, and how it could be modernized.
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It was Orr’s job to act as a liaison to Congress as the deputy assistant U.S. trade czar.
He believes the administration will deliver more specific marching orders to the negotiating team in the upcoming public notice, including a desire to work quickly. That desire for a fast negotiation could be hindered by the fact that the U.S. trade czar’s office still has numerous positions unfilled.
But he believes it can be done this year: “I think what is going to play out is a relatively short negotiation. Meaning a deal can be probably hatched by December… I think there’s a more expedient need (for Trump) to get a win, that would put a lot of what might be seen as controversial issues to the side for the sake of getting this win.
“This is one of his hallmark campaign issues. He has to have a win. He has got to show that he’s done something. I think he can make some modest improvements – necessary improvements, that brings (NAFTA), frankly, into a more 21st century agreement,” said Orr, now a trade adviser at the Washington law firm Miller & Chevalier.