U.S. ‘beginning’ internal discussions about renewing North American trade pact

For anyone with lingering night terrors from the last renegotiation of NAFTA, the notion of reopening the pact might evoke the trailer for a classic horror movie sequel: It’s baaaaa-aaaack

But this time is different, says the U.S. envoy to Canada.

In an interview with CBC News, Ambassador David Cohen said officials in his country have begun informal talks to prepare for new negotiations as required by the pact.

We’ve just passed the halfway mark, three years, to the sixth-anniversary milestone of the new North American trade deal where countries must start meeting to discuss future changes.

“On the U.S. side, we are just beginning to have our internal discussions about what we might like to talk about with Mexico and Canada as the sunset approaches,” Cohen said in an interview.

Cohen sat for a wide-ranging interview this week during a milestone of his own: the second anniversary of his arrival in Ottawa in December 2021, after being confirmed in the U.S. Senate.

He expressed confidence that, this time, the process will be devoid of the existential drama that gripped the negotiations in 2017-2018. One notable difference is that Joe Biden’s administration has avoided hinting, even inadvertently, at ending the pact, right down to its choice of language.

Unlike Donald Trump’s team, the current U.S. Trade Representative’s office refuses to use the term “sunset clause.” 

The current team prefers the more co-operative-sounding “joint review” when describing the process ahead, enshrined in the new NAFTA’s Article 34.7.

North American leaders announced their new trade deal here in 2018. It was a bitter negotiation that ended with different names for the pact in different countries. Canada calls it the Canada-U.S.-Mexico Agreement, while it’s known in the U.S. and most of the world as the U.S.-Mexico-Canada Agreement. (Kevin Lamarque/Reuters)

Trade-pact review starts in 2026

Its rules require countries to start meeting in 2026 and every year after, where they have two options: renew the agreement, or start negotiating changes.

The countries then get 10 years to renew the pact, known in the U.S. as USMCA. If they fail to do so, the agreement sunsets in 2036 — meaning, it’s dead.

Cohen says nobody is talking now about blowing up the deal. 

In fact, he noted that it’s frequently touted in Washington by members of both parties as the model example of a modern trade agreement.

“I’ve heard nothing about wanting to get rid of USMCA,” Cohen said, noting that even if they don’t like some dispute-panel decision, nobody in Washington is talking about blowing up the pact known there as USMCA and in Canada as CUSMA. 

The U.S. has lost a couple of high-profile disputes. One on dairy, another on automobiles.

It’s quite possible the U.S. will push for bolder fine print in both those areas, although Cohen says it’s premature to be speaking publicly about U.S. positions.

Already, the machinery within the U.S. government has lurched into the analysis phase, gathering data for two reports on the effect of the new rules for automobiles. One is due next year and another is due in 2025.

Many lines of cars
Vehicles seen at a GM lot in Oshawa, Ont., in 2018, the year North American countries signed the new continental trade pact. Autos were among the key issues in that negotiation and could be again as the deal comes up for renewal. (Tijana Martin/CP)

Biden and Trump: A contrast in styles

Look carefully, and there are already hints on the horizon that these negotiations might be different, depending on who’s in the White House.

It’s a difference in style more than substance that distinguishes the approaches by Biden and Trump, as neither is a fan of unfettered trade.

Take the autos decision last year.  

The Biden and Trump administrations both tried to use an unexpectedly strict formula to calculate what counts as a North American car; Mexico and Canada challenged this and won.

WATCH | Canada wins a trade dispute with U.S.: 

Canada, Mexico win trade dispute with U.S. over auto parts

Canada, Mexico and auto companies have been declared the winners in a trade dispute about calculating the origin of auto parts, arguably the biggest test of the new Canada-U.S.-Mexico agreement.

Now, Trump flatly says he would ignore the ruling. Meanwhile, his former trade czar has proposed a pre-emptive strike to weaken it. 

Lamenting that this was good for China, and bad for North American industry, Robert Lighthizer has written that the U.S. should warn its trade partners now: The U.S. will demand this decision be undone when it’s time to renegotiate.

In effect, he said, it would serve as a deterrent to auto companies, warning that they’re taking a gamble if they try building assembly lines around these rules — as the rules won’t last. 

Cohen in glasses wears face mask with Canadian and American flags
Cohen arrived in Ottawa during the pandemic in 2021, after a tumultuous period in Canada-U.S. relations. (Blair Gable/Reuters)

Highlights of 2 years in Ottawa

Without specifically mentioning the Trump administration, Cohen reflected, in his CBC News interview, on the mood when he arrived in Canada.

He says virtually everyone he talked to — business leaders, civil society groups, government officials, regular people on the street — opined about the damaged trust between Canada and the U.S.

He says Canadians would ask, “‘What happened? Did we do something wrong? You used to be our best friend … We’re not sure that’s true anymore.’ ” 

He said he’s taken heart in surveys that show a rebound in Canadian attitudes toward the U.S. since Biden took office.

On his first day in office, Biden’s administration cancelled the Keystone XL pipeline from Canada, but the countries have since managed to resolve disputes involving migration and incentives for electric vehicles. 

WATCH | The Canada-U.S. trade partnership: 

How strong is the Canada-U.S. trade relationship?

Chief political correspondent Rosemary Barton speaks with U.S. Trade Representative Katherine Tai, on her first visit to Canada, about the state of the two nations’ trade relationship. Tai says dairy and supply management remain a point of contention between Canada-U.S. economies.

Cohen called the shift in sentiment one of the highlights of his stint. He also mentioned Biden’s trip to Ottawa earlier this year, and a moving visit to Gander, N.L.

He says he knew the story, immortalized in the stage musical Come From Away, of how the tiny town took in thousands of stranded American travellers after the Sept. 11 attacks.

But he says it didn’t compare to speaking with the people who’d flung open their homes to strangers.

“Kind, open, gentle, people,” Cohen said. “In the United States people like to say, ‘Canadians are nice.’ I think Canadians are nice. I think the people of Gander are beyond nice.” 

People hold up glasses to cheer
One highlight for Cohen was visiting Gander, N.L. Seen here, residents prepare to watch the 2017 Tony Awards to cheer on the stage musical Come From Away, based on the days after the Sept. 11 attacks when people there opened their homes to stranded travellers. (Andrew Vaughan/CP)

Ambassador won’t discuss U.S. partisan politics

Here’s one thing Cohen is steadfastly determined to avoid discussing, especially in a Canadian media interview: next year’s U.S. election.

Prime Minister Justin Trudeau has begun invoking U.S. politics more frequently, referring to his opponents as “MAGA Conservatives.”

How does the U.S. ambassador feel about his country’s politics getting pulled into Canada’s debates, in the run up to an as-yet-unscheduled election?

“My answer is that I really am not comfortable, and therefore do not comment on politics,” Cohen said. “It’s something I am scrupulous in staying away from.”

He referred to the 1939 U.S. Hatch Act, which allows U.S. federal employees to express opinions, but not to participate in activities deemed partisan while they’re at work.

That line isn’t always clear, but White House lawyers recently instructed federal employees not to use the term “MAGA,” either positively or negatively, while at work.

Trudeau and Poilievre standing and smiling near each other in the House of Commons
Prime Minister Justin Trudeau, right, has begun calling the party led by Pierre Poilievre, left, the ‘MAGA Conservatives.’ It’s an obvious reference to American politics, and Cohen says he has no desire to discuss it. (Sean Kilpatrick/CP)

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