Toronto, ON — Foreign Affairs Minister Chrystia Freeland touted Ottawa’s made-in-Canada approach to NAFTA renegotiations Friday as she met with an array of advisers — from former politicians to labour representatives — ahead of the third round of talks in Ottawa this weekend.
“It has been, I think, noticed by Canadians, a source of strength to our negotiators, and noticed by our partners, the extent to which we have a real made-in-Canada approach to these negotiations,” Freeland said Friday. She was in Toronto to hold the first in-person meeting of the North American Free Trade Agreement advisory council created in August to advise Ottawa as it renegotiates the trade agreement.
“I really feel that gives us real strength as we move into the third round of these really important negotiations.”
The council, which includes former federal Conservative interim leader Rona Ambrose and Canadian Labour Congress president Hassan Yussuff, has met a number of times, Freeland said, but this is the first face-to-face sit down.
“I think we all thought it would be a good idea to do that, particularly now on the eve of the third round and the first one that will be held in Canada,” she said.
Freeland’s comments come as the third round of NAFTA negotiations between Canada, the U.S. and Mexico starts Saturday in Ottawa, marking the first set of talks held on Canadian turf.
Freeland also met Friday with members of the original NAFTA negotiation team, including former Prime Minister Brian Mulroney, and representatives of the Canadian auto industry.
The Canadian automotive industry is anxiously waiting to see if the next round of NAFTA negotiations will provide some clarity on American demands that vehicles must have “substantial” U.S. content to qualify for duty-free movement within North America.
Rules of origin — one of the most complicated and contentious issues on the table, particularly when it comes to the auto sector — is on the agenda for the third round.
But while Canadian officials had been hopeful the U.S. would finally put some flesh on the bones of its position over the course of the five-day session, they say it’s now uncertain whether American negotiators are ready to show their hand.
Flavio Volpe, president of the Automobile Parts Manufacturers Association, says everyone in government and industry is ready to spring into action the moment the U.S. tables its position but, in the meantime, they’re all “circling the airport.” He suspects they’ll have to continue circling for some weeks yet.
As far as Canadian officials are concerned, automobiles — specifically, the exodus of auto industry jobs and investment to low-wage Mexico — are at the root of President Donald Trump’s threat to rip up the North American Free Trade Agreement. And resolving the problem will be the key to the success, or failure, of efforts to rewrite the trilateral trade pact.
Hence, the eagerness to find out precisely what is the American bottom line on rules of origin.
Reports in the U.S. suggest the Trump administration wants to raise that to more than 70 per cent and add a requirement that anywhere between 35 and 50 per cent must be made specifically in the United States.
Moreover, the U.S. reportedly wants to add steel and electronics, which aren’t currently included, to the list of components whose country of origin must be traced.
Automakers on both sides of the border contend the U.S. position would disrupt their fully integrated North American supply chain, add costly red tape and ultimately weaken the North American industry’s competitiveness.
And trade experts on both sides of the border are warning that it could backfire.
Canadian officials, who are not authorized to speak publicly on the negotiations, believe tightening rules of origin is not the way to go. They contend the most effective way to reduce Mexico’s disproportionate share of auto investment and jobs is to strengthen labour and environmental standards under NAFTA.