U.S.-Canada Trade Talks Continue — Though Major Disagreements Remain

Aug 30, 2018
Originally published on August 30, 2018 7:37 pm
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ARI SHAPIRO, HOST:

There are more trade talks today in Washington between Canada and the United States. Earlier this week, President Trump announced a trade pact with just Mexico that's meant to replace the 24-year-old North American Free Trade Agreement. Now the Trump administration wants Canada to sign on to the new deal by tomorrow. But as NPR's Jim Zarroli reports, there are still some major obstacles in place.

JIM ZARROLI, BYLINE: NAFTA stripped away a lot of the tariffs and trade barriers that once existed between Canada and the United States. But there are exceptions, and one of them involves dairy farmers. The Ottawa government allows a certain amount of milk and cheese into the country. But past a certain point, it slaps tariffs on imports. It's meant to protect dairy farmers from outside competition. Roger Elliott (ph), who has a farm near Picton in southeast Ontario, says he's been across the border to New York State. And he says the farmers there aren't as prosperous.

ROGER ELLIOTT: So I can understand them wanting some of our share. But maybe if they had a system that was better than what they have now, they could be the same way that we are.

ZARROLI: This isn't a big issue for the U.S. economy, but Trump administration officials have complained often about Canada's closed dairy markets. Here is National Economic Council director Larry Kudlow who spoke on Fox this week.

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LARRY KUDLOW: There's a word that Canada has trouble with. It's M-I-L-K, milk - anything to do with milk and dairy.

ZARROLI: Canada could decide to open up its market for milk and cheese without too much pain, unless you're a dairy farmer. But there are other issues that will be harder to resolve. Monica de Bolle is a senior fellow at the Peterson Institute for International Economics.

MONICA DE BOLLE: There's the whole issue of dispute settlement mechanisms, which is very big for Canada and which - it doesn't seem like Mexico and the U.S. touched on it at all.

ZARROLI: De Bolle is referring to a part of NAFTA called Chapter 19. Let's say the U.S. government slaps tariffs on a Canadian company for unfair trade practices. Chapter 19 sets up an arbitration panel that the company can complain to that's outside the U.S. judicial system, and the panel's decisions can't be appealed. Economist Dan Ciuriak of the C.D. Howe Institute in Canada says this is one of several provisions in NAFTA that are meant to protect Canadian businesses from the country's much more powerful neighbor to the south.

DAN CIURIAK: Everything in the package is designed from a Canadian perspective to make us attractive as an investment location, and Mr. Trump is trying to undo that.

ZARROLI: Ciuriak says despite the happy talk coming out of Washington right now, it will be really difficult to resolve disputes like these by tomorrow. Monica de Bolle says even if the three countries can come to some kind of general agreement, it's likely to leave a lot of crucial details unresolved. De Bolle says she studied the agreement with Mexico that Trump released earlier this week, and parts of it are thoroughly confusing. Take the controversial sunset clause which gives the three countries the option to pull out of NAFTA after a few years.

DE BOLLE: The way they worded it was that every six years, they would extend it by 16. So what does that mean? I don't know what that means.

ZARROLI: The U.S. and Canada are eager to end the week by signing a trade pact. The danger, de Bolle says, is that they will rush through the details, and that could lead to some real problems down the road. Jim Zarroli, NPR News, New York. Transcript provided by NPR, Copyright NPR.