NAFTA threatened before Negotiations begin

Canada threatens to leave if Chapter 19 is removed; Trump says the US will leave if it isn't

English 26/07/2017 12:07 Ivette Saldaña Actualizada 12:54
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Just three weeks before the first round of negotiations begins, tensions have sparked between the partners of the North American Free Trade Agreement (NAFTA).

The Government of Canada said they would leave the trade agreement if the United States insists on removing NAFTA's Chapter 19 on dispute resolution, while American President Donald Trump claimed he would terminate the agreement if Canada doesn't renegotiate.

In Mexico, the Secretary of Economy, Ildefonso Guajardo, said removing Chapter 19 would be a step back in terms of transparency since this would damage American exporters.

The Secretary acknowledged this issue will be discussed and defended at the negotiating table with Canada.

Last Monday, the Trump administration presented the objectives that will guide their NAFTA improvement plan; some of their goals were the reduction of trade deficit and the removal of Chapter 19.

Yesterday morning, the Canadian newspaper The Globe and Mail spread the news that the Canadian Government will leave NAFTA if this chapter is removed.

During his tour around Ohio, Trump said: “We are renegotiating NAFTA and if we don't get the deal we want, we'll terminate NAFTA.” He added that the treaty has been a disaster for “Youngstown and Ohio”.

Clear Objectives. Trade experts agreed Mexico needs to be clearer with their objectives and join the petition to keep the dispute-resolution mechanism, albeit with improvements.

The former negotiator of Chapter 19, Gustavo Uruchurtu, and the other panelists of this mechanism, Adrián Benítez and Hugo Perezcano, agreed this mechanism should be kept and the Mexican Government should support this motion since it allows companies to directly request an investigation before the NAFTA Secretariat without the approval of the authority to begin the process.

Uruchurtu said this dispute-resolution mechanism was first proposed by the Canadians for the Free Trade Agreement they signed with the United States in 1988.

This same mechanism was picked up for NAFTA, but in essence, it's Canada's “crown jewel” and since they have used it more than any other country, Mexico should prevent its removal, but promote improvements, such as the Governments providing more resources for proceedings and choosing unbiased arbitrators, he said.

Uruchurtu considered that removing Chapter 19 is a negotiation strategy since what the US is truly after is to have easier panel resolutions.

Vázquez Benítez said Canada asked for this mechanisms because the system in the US is too biased in favor of the interests of the country and there is a lack of trust in their courtrooms.

Now, Canada is defending it as a way to put the cards on the table regarding what a government is willing – or not – to negotiate, since they consider it a neutral system to resolve disputes.

He also said the arguments of the Canadian officials carry more weight since they are the ones who most often bring forth disputes to this mechanism.

Perezcano said Canada's statement isn't surprising – considering they proposed the mechanism – while Mexico remains neutral since there is no desire to see an increase in custom's duties on main export products.

He asked Mexico to support Canada because the chapter – while it has room for improvement – works and prevents the settling of disputes in the courtroom of each country.


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