Five Potential NAFTA Deal-Breakers for Canada

With negotiators at the table in Montreal to hash out a refreshed North American Free Trade Agreement (NAFTA), RBC Economist-Policy Lead Mathias Hartpence dug into some of the key sticking points in reaching a new deal.

In a recent report titled Breakpoint: What Canada needs to consider to save NAFTA, Hartpence outlined five U.S. demands that are “potential deal-breakers” for Canada, how wedded Canada is to each and whether there are any alternatives that could resolve matters.

The five U.S. demands that Hartpence highlights as possible sticking points include:

1. Tightening rules of origin within the automotive sector.
2. Opening government procurement dollar-for-dollar, giving U.S. firms access to a much greater share of the Canadian market.
3. Eliminating Chapter 19, the dispute-settlement mechanism that shields Canadian exporters from having to fight trade disputes in U.S. courts.
4. Introducing a sunset clause that could terminate NAFTA every five years.
5. Dismantling the Canadian supply management system, in particular for dairy products.

Hartpence notes these are all on top of the traditional tough topics when it comes to trade talks between Canada, the U.S. and Mexico. Among those are intellectual property issues, such as patent and copyright terms, and movement of professional workers.

Find Hartpence’s full Nafta report and other RBC economic research in Market Commentary under the Research tab.