Mexico readies for worst as 4th round of NAFTA talks open

Violet Powell
October 14, 2017

American negotiators want Canada to be "more transparent" about its supply management system for dairy, according to a source with direct knowledge of the NAFTA talks.

Although sources briefed on the talks describe the mood as sour, Mexican and Canadian politicians say there is no question of leaving the table for now. They noted that U.S. Trade Representative Robert Lighthizer, Canadian Foreign Minister Chrystia Freeland and Mexican Economy Minister Ildefonso Guajardo were due to meet in Washington on Tuesday to take stock of the negotiations.

Canada had been expecting extreme demands from the US, after President Donald Trump said Canadian dairy rules were "unfair" to American farmers back in April.

But Mexico and Canada insist there is no point updating the pact with such a threat hanging over it, arguing the clause would stunt investment by sowing too much uncertainty about the future of the agreement.

Trump has made no secret that he prefers bilateral trade deals, and skeptics wonder whether the USA demands are part of an "America First" strategy created to ensure the current talks fail. That is in addition to its insistence that 50 percent of content be US -made within the first year of a signed deal.

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His comments came after Canada's producers lowered their prices for dairy ingredients to make them more competitive against cheaper American imports.

But Trudeau said Canada does have Mexico's support when it comes to introducing a gender chapter into the trade pact.

Negotiators were also set to cover the hard issue of government procurement on Thursday. The Mexican government is exploring other markets beyond the U.S. USA negotiators have countered with a proposal that would effectively grant the other countries less access, people familiar with the talks say.

But the Americans also want a country-specific change that would increase USA content requirements to 50 per cent in the first year of the new deal.

The rules of origin demands are among several conditions that the U.S. Chamber of Commerce has labeled "poison pill proposals" that threaten to torpedo the talks.

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