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Canada, Mexico reject U.S. NAFTA proposals as latest round of talks wind down

Click to play video 'Freeland ‘troubled’ by unconventional proposals during NAFTA talks' Freeland ‘troubled’ by unconventional proposals during NAFTA talks
WATCH ABOVE: Freeland 'troubled' by unconventional proposals during NAFTA talks

Canada and Mexico have rejected U.S. proposals brought to the North American Free Trade Agreement negotiating table during this latest round of talks on the trilateral trade deal, according to reports.

The proposals in question, according to Bloomberg, revolve around the dairy and auto sectors, dispute resolution, government procurement and a sunset clause that would effectively end NAFTA after five years unless all parties agree to extend it.

WATCH: Freeland says there are 5 key areas where NAFTA is far apart

Click to play video 'Freeland says there are 5 key areas where NAFTA is far apart' Freeland says there are 5 key areas where NAFTA is far apart
Freeland says there are 5 key areas where NAFTA is far apart

When questioned as to whether those are the key stumbling blocks,  Foreign Minister Chrystia Freeland said Tuesday: “those are certainly areas where there is a distances between our position and the U.S. position.”

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READ MORE: U.S. asks Canada to end dairy, poultry trade barriers, even as it puts up its own

Sources told Bloomberg that with Canadian and Mexican negotiators not biting on the Americans’ latest proposals to update NAFTA, there are now two tracks on which the negotiations stand: one that’s hit a dead end with the most contentious of the United States’ proposals, and another upon which talks are moving forward on other proposals.

WATCH: The U.S. representative during NAFTA negotiations said on Tuesday that he’s surprised and disappointed by the “resistance to change” during NAFTA negotiations.

Click to play video 'U.S. NAFTA representative surprised, disappointed by resistance to change' U.S. NAFTA representative surprised, disappointed by resistance to change
U.S. NAFTA representative surprised, disappointed by resistance to change

Similarly, sources told CNBC that neither Canada nor Mexico is going to walk away from the negotiating table despite the “outright rejection of the U.S. protectionist demands.”

U.S. Trade Representative Robert Lighthizer said other countries are struggling to accept the reality that the U.S. wants to rebalance its trade agreements. He said other countries and industries must stop counting on easy export access to the U.S. market.

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“Frankly I am surprised and disappointed by the resistance to change from our negotiating partners,” he said, with his Canadian and Mexican colleagues standing at his sides.

WATCH: Freeland addresses aggressive vs. bad faith NAFTA bargaining by U.S.

Click to play video 'Freeland addresses aggressive vs. bad faith NAFTA bargaining by U.S.' Freeland addresses aggressive vs. bad faith NAFTA bargaining by U.S.
Freeland addresses aggressive vs. bad faith NAFTA bargaining by U.S.

Freeland pointed to the fact that negotiations are now scheduled through the first quarter of 2018 as a sign that there is still a deal to be had despite the wide gap between the three countries.

“There is goodwill in all parties. A real willingness to roll up our sleeves,” she said. “And having acknowledged the significant distance,  to spend the time it takes to seek a resolution.”

Entering the talks, the federal Liberal government had said it had no intention of even discussing supply management, having promised to maintain the system.

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READ MORE: U.S. auto part content proposals could sink NAFTA talks, experts say

The United States, however, this week came in asking for an end to the supply management system for dairy, chicken, eggs and turkey within the next decade.

Following the U.S. proposal, Agriculture Minister Lawrence MacAulay reiterated the government’s position and said anything touching on supply management is “simply a non-starter.”

WATCH: Canada’s top priorities in NAFTA negotiations

Click to play video 'Freeland ‘troubled’ by unconventional proposals during NAFTA talks' Freeland ‘troubled’ by unconventional proposals during NAFTA talks
Freeland ‘troubled’ by unconventional proposals during NAFTA talks

With the proposal, dairy, poultry, and eggs found their way on to a growing  list of irritants that includes auto parts, textiles, trade-enforcement panels, Buy American rules for public works and a proposed five-year termination clause embedded in the agreement.

On these issues, the three bargaining countries hold not just different positions, but in some cases sit on opposite sides of gaping ideological differences.

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The U.S. has introduced aggressive demands in virtually every major NAFTA area:

  • Auto parts. The U.S. wants all cars to comprise 50 per cent U.S. content to avoid a tariff. The U.S. has requested this policy be phased in within one year, which automakers call impossible.
  • Dispute-resolution. The U.S. wants to gut the enforcement systems of NAFTA, making the panels for Chapter 11, 19 and 20 disputes either non-binding, or voluntary.
  • Buy American. The U.S. wants to severely curb other countries’ access to public works contracts.
  • Sunset clause. The U.S. has requested a termination clause that would end NAFTA after five years, unless all parties agree to extend the agreement.
  • The supply management request follows an earlier request for a de-facto veto over Canadian milk-classification decisions, which in the case of diafiltered cheese-making products has advantaged Canadian producers.

-With files from Global News’ Kevin Nielsen and The Canadian Press