MONTREAL, Canada—The sixth round of negotiations on Nafta, the North American Free Trade Agreement, is underway in Montreal. Canada and Mexico made news as the talks opened by announcing a separate free trade deal, a newly revived Trans-Pacific Partnership with 11 nations in the Pacific Rim. Withdrawing the US from that deal was one of President Donald Trumps’s first acts in office.
Mr Trump said the Nafta talks are going “pretty well,” but he has also said that he will withdraw the United States from Nafta should he feel that not enough progress has been made. Those two statements are framing discussions by delegates from Canada and Mexico who are bracing for the next move by the US.
As a border state, Vermont has a high stake in the outcome. From auto parts to food to apparel, Vermont manufacturers have leveraged Nafta to export their products to Canada and Mexico duty-free as part of an integrated North American economy.
In Vermont, business people like Jean-Marc Landry who depend on duty-free access across Nafta’s borders are watching events unfold in Montréal. He manufactures an automatic braking system that is added to a wheelchair to keep them in place when a patient stands up.
“One of the problems that we have with the wheelchair is that they kind of roll away,” as he explained the genesis of his technology.
Landry manufactures parts In Lyndonville and Richmond Québec . He invented the technology after his grandmother tried to get up from her wheelchair and it rolled away.
“She fell on the ground. She broke her hip and then she was admitted to longterm hospital,” Landry continued elaborating on the anguish of seeing his grandmother hospitalized after an accident that his braking system would have almost certainly prevented.
Landry is now bringing parts from Québec to Vermont for assembly in Lyndonville. He said he chose to locate his US operation in Vermont because of a host of attributes that he said were unique to Vermont. He said in addition to Vermont’s strategic location with a 90 mile border with the Province of Québec, he enjoyed access to top state government leaders, something that he said stood in contrast with the other states he had considered including New York, Virginia and Texas. He praised the work of the Northern Vermont Development Association NVDA, a non-profit organization that promotes business development. Landry said the NVDA had helped him set up shop with an affordable rent in an industrial park in Lyndonville. He also said he was attracted to Vermont by the positive reputation of its labor force.
However he said before those considerations, his move into the US market was premised on Nafta’s tariff-free environment. “Without the Nafta, it’s going to make the parts more expensive on both sides,” adding that the higher cost of production would eventually be passed on to consumers, a scenario that is not comforting to a small business owner.
Landry has heard about the lack of progress in the previous five rounds of Nafta negotiations. It may be public posturing to try and trigger an US response, but recent statements by senior Canadian officials do not inspire confidence that a resolution is near.
Rona Ambrose, a member of the Canadian government’s Nafta Advisory Council has told Canada’s CTV it’s not a matter of if but when the US withdraws from the agreement “Right now there is just a complete lack of flexibility on the American side. It’s basically their way or the highway.”
The US wants a new rule that would mandate that cars shipped duty-free from one Nafta nation to another contain 50 per cent US-made components. That’s not a realistic demand said Falvio Volpe, president of the Automobile Parts Manufacturers Association.
“There’s no movement,” Volpe said of the American negotiating team. “So that’s not, that’s not, creative,” he said.
Birgit Matthiesen is in to observe the talks. She runs the cross-border practice at a large Washington DC law firm. “The ground has shifted for many manufacturers,” she said in a hallway outside the negotiation hall at a downtown Montreal hotel.
Matthiesen represents clients in the three Nafta nations. She has briefed members of the administration of Governor Phil Scott on the progress, or lack of it, in the negotiations.
“What is at stake here for Vermont is a successful Nafta that promotes Vermont’s cross-border trade to compete in our own back yard in North America,” said Matthiesen.
Hassan Yussuff heads the Canadian Labor Congress, Canada’s largest labor movement. He represents more than three million workers. Yussuff told CBC Radio’s weekly political affairs roundup The House that Nafta uncertainty cuts both ways.
“Given the degree of trade we do with the United States, it’s not just us having access to their market. It’s also about them having access to our market. So the uncertainty, while we’re obviously going to ne worried, I think the Americans should not take us for granted,” he said.
Birgit Matthiesen said doubts about Nafta aren’t good for business. “The negotiations need to come to a conclusion soon because companies in North America cannot make long term plans in an era of uncertainty.”
Talks are not scheduled beyond March when a seventh round is set to take place. Absent an agreement, President Trump will have three choices: start the process of cancelling NAFTA as he has threatened to do, stay in the negotiations, or hold off for a few months as Mexico elects a new president in July and the US prepares for midterm elections in November.