Tough NAFTA Negotiations Continue

In October, at the fourth round of the NAFTA renegotiations in Washington, several U.S. proposals caused major problems for both Canada and Mexico—and many interested parties in the United States. Among those proposals were:

Five-Year Sunset Clause—This proposal would terminate the entire agreement after five years unless the parties decided to renew it. Such a clause would create major uncertainty. Most investments designed to take advantage of a trade agreement are amortized over a much longer period than five years.

Dispute Settlement—NAFTA contains three types of dispute settlement: the normal intergovernmental procedure for resolving disputes between the three countries about the interpretation of the agreement, special binational panels for resolving disputes about whether antidumping and countervailing duties are applied in conformity with domestic law, and investor state dispute provisions.