NAFTA 2.0: Canada, Mexico and U.S. negotiation rounds move into the first quarter of 2018

The three parties to the North American Free Trade Agreement (NAFTA) held the third, fourth and fifth rounds of renegotiation (Ottawa, September 23–27; Arlington, October 11–17; and Mexico City, November 17–21). The next round of NAFTA renegotiations is scheduled for January 23–28, 2018 in Montreal. Negotiations are expected to continue through the end of March 2018, before the July 2018 presidential election in Mexico.

On November 17, 2017, the U.S. Trade Representative (USTR) released an updated version of the NAFTA negotiating objectives, which were originally published in July. The update expands significantly on the U.S. negotiating objectives with respect to investment.

The updated document clarifies that the objective to “reduce or eliminate barriers to U.S. investment in all sectors” includes rules such as national treatment and most-favoured-nation treatment, a minimum standard of treatment under customary international law, and prohibitions on expropriation, transfer restrictions and performance requirements.

Regarding investor–state dispute settlement (ISDS), the revised goals aim at ensuring arbitrator impartiality and independence, swift review and dismissal of frivolous claims, and correctness and coherence of the interpretation of investment rules. The USTR also aims at ensuring open hearings, prompt publication of key documents and a mechanism to allow amicus curiae submissions.

The United States reportedly continues to propose an opt-in system for ISDS that would allow each NAFTA country to decide whether or not to participate. On this point, Mexican Economy Minister Ildefonso Guajardo stated: “We can explore the opt-in, as long as we can define our own opt-in,” and added that, otherwise, Mexico is “not interested.”

In turn, Canada is reported to be pushing for the replacement of the Chapter 11 ISDS provision with an Investment Court System (ICS), mirroring the one included in the Canada–European Union Comprehensive Economic and Trade Agreement (CETA). The proposed ICS would be composed of a first instance tribunal and an appeal tribunal.