To start there is a great deal of talk about modernizing NAFTA, improving the agreement to add provisions on trade in services, digital commerce, intellectual property and even reference to establishing “strong and enforceable environmental obligations” and other things that, subject to careful reading, could be acceptable as a basis for negotiations.
There are, however, 4 Key Demands, signalling an aggressive stance by the Americans, making it difficult for Canada to accept the document as a basis for negotiations.
First - the U.S. wants to eliminate the binational panel system in Chapter 19 of the NAFTA, the system that was negotiated in the bilateral Canada-U.S. free-trade agreement in the 1980s and later replicated in the NAFTA. Canada made many compromises as part of the FTA talks to get the binational panel system accepted by the U.S. To now look for its removal - a fundamental Canadian interest - could derail talks.
Second - the U.S. objective to remove all restrictions on “Buy America” preferences at the state and municipal level, including on all federally funded programs for an array of local projects. The U.S. is seeking a wholesale removal of preferential programs that run up against some of the key principles of open trade and GATT-based non-discrimination.
Third - removing the right of Canada (and Mexico) to be excluded from U.S. safeguard actions against imported goods. Safeguards - global import restrictions that apply when U.S. industries are being injured by an unexpected flood of imports that are neither dumped nor subsidized. Under the NAFTA, Canada and Mexico are exempted from such actions unless their exports “contribute importantly” to the injury caused to U.S. producers.
Fourth - reduce or eliminate barriers to U.S. investments “in all sectors” in the NAFTA countries. This suggests the U.S. wants an end to Canada’s restrictions on American investments in such things as telecommunications, health care, education and cultural industries.
These 4 Key demands are a tough set of U.S. objectives targeting the heart of the trading relationship and represent an assault of existing NAFTA rules as far as Canada is concerned.