NAFTA’s fate will rely on pragmatic proposals by US negotiators to its trade partners
“Uncertainty I think will be the name of the game for quite some time,” Vetter said at the IDFA Dairy Forum in Palm Desert, Calif., this week.
“In the past when the United States was engaged in a free trade negotiation with one of its partners, you might not know when you might achieve an outcome or what the result would be, but in the end you knew the outcome was the realization of trade and the breaking down of barriers and access.”
Unpredictability of US global trade agreements, such as the anticipated conclusion to the sixth round of NAFTA renegotiations in Montreal, Canada, has begun to spread, according to Vetter.
“The more difficult the talks get or the more detailed they get, the more I think your customers will respond to that uncertainty by hedging their bets and diversifying the places they get supply,” she said.
“I think you're starting to see that behavior reflect in the market place.”
Mexico, a key trading partner with the US, has sped up talks on a 17-year-old free trade deal with the EU as NAFTA renegotiations continue.
Canada remains a concern
A major part of the NAFTA renegotiations include Canada’s trade barriers, particularly its supply chain management system for dairy products, which the US has demanded an end to within the next 10 years.
“They are operating in a way that incentivizes Canadian exports at a very low cost into the global market. So it’s not just a Canada problem, it has now become a global problem,” Vetter said.
However, according to Vetter, true negotiation between the US and Canada on NAFTA might be stalled by the number of “difficult” demands the US has made.
“It was always going to be a hard one to resolve, but if you look at the way that issue has been put on the table by US negotiators, they have by all reports asked for very strong, duty-free access of the Canadian market,” she said.
“They’ve also done so in the context of making proposals that would be very difficult for Canada to accept and that would weaken the benefits of NAFTA for Canada.”
Presenting a number of hard-to-swallow “poison pill-type proposals” at once to Canadian trade negotiators could risk Canada dismissing the US proposals as not a serious negotiation rather than a pragmatic discussion, Vetter added.
“I do think this round is important because it tells us whether we’ll enter into further negotiations or if we’re just staking out positions.”
