Freeland heads to Mexico to finalize NAFTA changes

Deputy Prime Minister Chrystia Freeland is heading to Mexico City to signal Canada's approval for more changes to the North American trade agreement.

Mexico's foreign ministry announced that officials will meet at midday Tuesday at the presidential palace. U.S. President Donald Trump's trade representative, Robert Lighthizer, and Trump's son-in-law and adviser, Jared Kushner, will represent the U.S.

The leaders of the three countries signed what was, at the time, portrayed as the final text of an agreement to replace it over a year ago, on the sidelines of the G20 summit in Buenos Aires, Argentina.

But congressional Democrats in Washington were unwilling to proceed with ratification of the deal as originally signed, after the American labour movement and others criticized it as insufficient in several ways, including enforcing the new deal's higher labour and environmental standards in Mexico. 

Now the long wait for ratification in the U.S. appears to be over. After months of negotiations, The Associated Press reported Monday that congressional Democrats may be satisfied with the text of changes proposed by Lighthizer. House Speaker Nancy Pelosi met with senior Democrats on Monday evening to study the changes, and said more meetings were planned for Tuesday.

"We're close. We're not quite finished yet. We're within range," Pelosi said Monday night. "We're at a moment of truth."

The endorsement of Richard Trumka, the president of the American Federation of Labor and Congress of Industrial Organizations (AFL–CIO), was key to easing both Republican and Democrat minds. Trumka briefed his executive on the changes on Monday afternoon.

"We're doing very, very well on USMCA, hearing from unions and others that it's looking good," U.S. President Donald Trump told reporters at a White House event on Monday afternoon.

Prime Minister Justin Trudeau and Trump spoke by phone on Monday evening. According to the Prime Minister's Office, the pair spoke about "progress towards ratification of the new North American Free Trade Agreement."

When Democrats gained control of the House of Representatives in the 2018 midterm elections, it left Lighthizer no choice but to compromise if he wanted NAFTA's replacement to come to a vote.

"It's time, it's the moment," Mexican President Andrés Manuel López Obrador told Pelosi at his regular news conference Monday morning, adding that time was short if the deal is to avoid being overtaken by next year's presidential election.

Lighthizer presented his Mexican counterpart, Jesus Seade, with proposed changes on Saturday. On Sunday, Mexican senators met to consider the new text and signalled their approval.

Deputy Prime Minister Chrystia Freeland said during Monday's question period that she'd been in frequent contact with her American counterparts over the weekend and on Monday morning. Later, she briefed Trudeau on the progress of the negotiations.  

An agreement now allows Lighthizer to complete modifications to the implementation bill that NAFTA proponents still hope could be brought to the floor of the House of Representatives before its Christmas break.

The American ratification process is complex, with multiple stages remaining, including approvals from powerful House and Senate committees. At the same time, the attention of American lawmakers risks being dominated by impeachment proceedings and, soon, the presidential primary season.

Enforcement, drug changes coming

Groups representing Canadian industries that could be affected by the revised text told CBC on Monday that they had yet to be briefed on exactly what changes have been made as part of this compromise.

Following his Nov. 29 meeting with Freeland, Seade told reporters that the Democrats' concerns were valid, and the changes under discussion were going to improve the deal.

Seade confirmed that a loophole that allowed one country to block the establishment of an arbitration panel should disputes arise under the revised agreement was being fixed.

New text to change the deal's state-to-state dispute resolution chapter is one reason the three countries are expected to need to re-sign the agreement (or some add-on to the agreement) before the U.S. legislation can be introduced. No details for such a ceremony have been announced, pending confirmation that all sides are ready to sign off on Tuesday.

Seade also confirmed that changes were pending to the deal's intellectual property rules for new biologic drugs, with some news outlets reporting last week that this measure has been deleted from the deal altogether.

CBC News has not independently confirmed this removal with Canadian government officials, who have consistently refused to negotiate in public by signalling their approval or rejection of various proposals.

Pharmaceutical representatives contacted by CBC last week said they would not speculate or comment until they had seen the final text, although Canada's generic industry said it would support an improvement like removing the obligation for 10 years of data protection for biologic drugs. 

Last-minute proposals on digital chapter, steel 

It's unclear if everything Democrats were asking for is reflected in this compromise, such as demands for better enforcement of labour and environmental conditions at Mexican facilities, including a stepped-up inspection regime and penalties like the reapplication of tariffs on goods from Mexico if they're found not in compliance.

A Canada–Mexico working group on labour issues met in September, although its work is only in the early stages.

Budget spending estimates tabled last week in Parliament did not allocate new funds to pay for its future activities. As part of this process, Canadian experts in labour law and union organizing are expected to help set up collective bargaining at potentially thousands of Mexican facilities, in order to bring them into compliance with the deal's new standards.

Late last week, American news outlets also reported that further changes were sought to the deal's digital chapter as it pertains to the liability of internet service providers for the content they host.

The precise definition of "North American steel" was also part of the end-game discussions that dragged on between Lighthizer and Seade for the better part of last week. Mexico was reluctant to accept a definition that would require all the steel to be "melted and poured" in North America, but Foreign Minister Marcelo Ebrand said Sunday it would concede if this rule took effect at least five years after ratification.

Details on how these additional changes could impact Canadian industries remain to be revealed.

Canada has yet to ratify the successor to NAFTA. The Trudeau government introduced an implementation bill in the previous Parliament, but it did not pass before this fall's election.

If this latest compromise in Washington results in breaking the logjam that has held up U.S. ratification, the Liberals are expected to reintroduce (potentially updated) implementation legislation in the House of Commons this winter, to bring Canadian laws and regulations into compliance with the revised text.