Home Blogs Paul Lansbergen NAFTA Renegotiations – Sage advice from my Mom

NAFTA Renegotiations – Sage advice from my Mom

One of the many wise things my Mom always told me is that patience is a virtue. Canada's pulp and paper sector would be wise to heed this sage advice as it looks for certainty from the current tripartite negotiations to modernize the North America Free Trade Agreement (NAFTA).

It is difficult to determine at this point what the eventual impact of the negotiations will be on the sector. There is not enough space here to delve into the specific issues and there are others more informed than I to do so anyway. So, let's stay with the thread of when will we know the outcome of these negotiations and why it won't be as quick as the negotiators would like us to believe.

There are three initial rounds of talks – one in each national capital city – that will be completed just prior to publication of this article. As of the second round in Mexico City the countries were still miles,... pardon me,... kilometres apart on the most important issues. For example, the US wants to eliminate Chapter 19 – Dispute Settlement Mechanism, which is vital to Canada, and our beloved softwood lumber industry. Canada has rightly drawn a hard line in the sand on this. Minister Freeland will walk away from NAFTA before accepting a weakening of Chapter 19.

If we consider the scenario that Canada, the US and Mexico do ultimately agree on new terms, then each national government must ratify the new agreement. This will get caught up in the US and Mexican election cycles – US mid-term elections in November 2018; Presidential general election in Mexico in July 2018. The Canadian general election in Oct 2019 is less of an issue. Let's focus on Goliath.

If a new agreement complies with the conditions of the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 (TPA-2015), Congress could ratify with a simple yes vote. Difficult enough given Trump's dismal performance thus far. But then add in mid-term elections (all 435 House of Representatives, 1/3 of the Senate (33 seats), and 39 state and territorial Governorships) implications and you get chaos. Republicans facing the mid-term elections will do everything they can to save themselves and that will likely paralyze Congress even more than it already is. Democrats gaining control of Congress could be a good thing. They could get organized to negotiate with Trump on issues to move the yard sticks – but that (naïvely) assumes leadership and discipline among the Democrats.

If an agreement was perceived to step outside the bounds of TPA-2015, then Congress could exert its power to consider elements of a proposed agreement not just its entirety. In this scenario, a solution to climate change has a better chance than ratification.

What is a company and industry to do? Another thing my Mom told me was not to put all your eggs in one basket. So, I encourage companies to diversify beyond the US while we wait for the outcome of these renegotiations.

Paul Lansbergen has over 20 years' experience in public policy, advocacy and association leadership.
For the last 15 years, Paul was an integral part of the senior management team at the Forest Products Association of Canada. He is recognized for his strategic and operational corporate knowledge, as a consensus builder, and as a progressive leader.
Paul is a Certified Association Executive (CAE) and has two degrees in Economics. Paul is based in Ottawa, Ontario, Canada.

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