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The sixth round of negotiations for the “modernization” of the North American Free Trade Agreement (NAFTA) are taking place this week in Montreal. Observers see this round as a potential turning point as the three countries plan to discuss more contentious topics, such as revised rules of origin for the automotive sector. The parties held an inter-sessional meeting in December 2017, and made progress on less difficult issues, such as finalizing an annex on cooperation on energy efficiency standards and Energy Star.

HRAI participated in an updater meeting on January 10th led by Martin Moen, Director General of the North America & Investment Division and NAFTA Deputy Chief Negotiator.  He reported that, against previous resistance, the US is now willing to negotiate a stand-alone energy chapter (which would include a process for EE standards approvals) – which he saw as a very positive signal from the US administration.

In general, Canada and Mexico are aligned on most issues, while the US is still very focused on proposals designed to protect their market. There is still optimism, however, that the principles of the Regulatory Cooperation Council (RCC) – a key concern for manufacturer members of HRAI -- will be incorporated into the agreement.  Canada is proposing that in NAFTA Canada and the US continue to pursue RCC as well as tri-lateral discussions about alignment.  But Moen pointed out that RCC is a process, a commitment, not an outcome.  The US has said on several occasions that it is not opposed to regulatory cooperation but is reluctant to put it in a trade agreement, partly because RCC managed through a separate office – the Office of Information and Regulatory Affairs (OIRA).  Canada is less concerned about this. 

Despite some cautious optimism, Mr. Moen noted that there is still a very real possibility that the US will trigger a six-month notice of withdrawal.  He added that, even if the US pulls out of NAFTA, the agreement would still be in force for Canada and Mexico.

Two additional rounds of negotiation are contemplated, one per month, with a goal of wrapping up the process in March.

To see a copy of HRAI’s July 2017 submission on the NAFTA Renegotiation, click here.

For more information, contact Martin Luymes at 1-800-267-2231 ext. 235 or email mluymes@hrai.ca.