Talks between Canadian, American and Mexican government officials aimed at modernizing the North American Free Trade Agreement (NAFTA) resume in Ottawa this week as frustrations grow over U.S. proposals and demands.
Sources involved in the ongoing talks have said that the U.S. negotiating team will only partially unveil new text on modifying a key chapter on investment under NAFTA, even as the Americans demand concessions for the U.S. automotive sector.
Trade experts say the sluggish tempo of the talks means it is doubtful whether Canada, Mexico and the United States — meeting in Ottawa for the third of seven planned rounds of talks — can come to a deal by the end of December as planned.
"We're making good solid progress ... but the end game is always the hardest part and impossible to predict," said Chief Canadian negotiator Steve Verheul on the weekend.
U.S. President Donald Trump, who frequently describes the trilateral NAFTA agreement as a disaster, is threatening to walk away from the talks unless major changes are made.
Mr. Verheul told reporters the talks were constructive, although they had occasionally "become a little more heated" in recent days. He added that he has seen no signs that the U.S. delegation might be preparing to leave the talks.
NAFTA underpins more than $1 trillion in trade between the three countries a year, accounting for 39 percent of Canada's GDP and 40 percent of Mexico's, but just 5 percent in the case of the United States, the world's largest economy.
NAFTA's Chapter 11 clause allows an investor from a member country to sue a member government on the basis that it was not treated fairly. While corporations want the administration to keep Chapter 11 — the investor state dispute settlement — in NAFTA, some U.S. lawmakers argue that it infringes on sovereignty by allowing foreign investors to sue the U.S. government over laws that are valid.
Canada is proposing a similar arrangement to the one it has in its free trade deal with the European Union (EU), a senior Canadian source said. Canada and the EU have agreed to set up a permanent investment court to settle disputes that arise.
The sources said that when the U.S. team unveiled its proposal later in the round, it would focus on eliminating barriers to investment in all sectors in the NAFTA countries, but not weigh into possible changes to Chapter 11.
The three member nations want to seal a deal before Mexico's presidential election campaign kicks into high gear in early 2018. Canadian officials said on Sunday there had been advances in less heated subjects such as the environment and small and medium-size enterprises.
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