Canadian trade experts expect NAFTA to survive American threats

Instead of simple tweaks, the first round of North American Free Trade Agreement (NAFTA) talks has got off to a rocky start in Washington on Wednesday with the U.S.'s chief negotiator calling for a full overhaul of the 23-year-old pact.

Meanwhile, in Vancouver, trade experts cautioned that NAFTA talks could last many months or even years, as Canada, Mexico and the U.S. iron out new provisions and chapters of the treaty, which U.S. President Donald Trump has called the worst trade deal ever signed。

Canada's Foreign Affairs Minister Chrystia Freeland remarked on Wednesday that Canada aims to maintain NAFTA as an engine for economic growth and jobs. She said her team of negotiators aim to cut the red tape for business, make it easier for professionals to work North America-wide and to create a pact that boosts rights for labor, women and indigenous people, while also doing more to protect the environment.

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"I want to be clear that (Trump) is not interested in a mere tweaking of a few provisions and a couple of updated chapters," U.S. trade representative Robert Lighthizer said during opening remarks in Washington. "We feel that NAFTA has fundamentally failed many, many Americans and needs major improvement.

Two trade and economy experts at the University of British Columbia (UBC) in Vancouver said in separate interviews with Xinhua on Wednesday that the tough talk from the U.S. signals what will likely be a combative and drawn-out negotiation, but both believed NAFTA will remain in place once the dust settles.

"This could really stretch out, and the U.S. wants to address trade imbalances, and that's going to be something that's unprecedented," said John Ries, an international trade expert at UBC, referring to Trump's complaints over trade deficits with Mexico and Canada.

"I think (NAFTA talks) will stretch out for a long time, and maybe years," he said, noting that Trump's complaints over trade deficits cut deep into the nature of free trade pacts.

He said Canada's desire to protect its supply managed dairy and poultry industries will also be a major sticking point.

"I think (the talks) could go off the rails, but I don't think that would mean no NAFTA agreement," Ries said. "I think the status quo will prevail."

If the U.S. decides to withdraw from NAFTA they are required to provide six month's notice, he said. "That has been threatened but not executed. Whether or not Trump can withdraw without congressional support is an unclear issue. We could have legal wrangling space and the treaty could stay in place for many years to come."

He told Xinhua that the NAFTA talks could outlast Trump's own presidency.

"I just don't think that Trump has the political capital to do something that radical," Ries said. "I'm not that pessimistic. It is my speculation and hope that it will be business as usual and we will have a pretty open trading environment."

Fellow UBC trade expert James Brander said that much won't be done in the first round of talks in Washington.

He told Xinhua that "I'm expecting these first four days to just mainly deal with getting the proposals on the table in detail,"

"Donald Trump is impatient, but trade negotiations always take a long time," he said.

Brander is equally optimistic that a form of NAFTA will remain in place whatever the outcome of these talks may be.

"Today, just starting out, the United States negotiations have taken a very strong - almost pugnacious position - which is not positive," he said. "It's a very bad start," he said. "So, what if it does go off the rails?"

He said in that case, many layers of legal and constitutional questions remain in the U.S. over whether Trump could pull the U.S. out of NAFTA without the support of Congress.

"I think that probably the dominant position on that is that the president cannot do that," Brander said. "That would require congressional approval and there is no way that congress would approve that. Not even a Republican congress."

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Chinese vice premier upbeat about China-U.S. economic cooperation

Chinese Vice Premier Wang Yang said on Tuesday that thanks to China's long-term economic development trend and market potential economic, the cooperation between China and the United States holds out a promising future.

"Cooperation is the only right choice for our two countries. The giant ship of China-U.S. economic and trade relations is sailing on the right course," Wang said at a China-U.S. business luncheon ahead of the first China-U.S. Comprehensive Economic Dialogue, which is slated for Wednesday.

China has been pushing forward economic restructuring and adhering to reform and opening-up in its economic development, and these efforts have yielded tremendous progress over the past decades, said Wang.

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The contribution of China's consumption to economic growth jumped to 77 percent in the first quarter of this year, up from 47 percent in 2013, he noted.

He added that China's current account surplus relative to the GDP dropped from the peak of about 10 percent in 2007 to 0.7 percent in the first quarter of this year, and that China has also been allowing broader market access and greater opening of the service sectors.

The long-term certainty of China's development and progress offers the most important external environment for foreign businesses in China, said the vice premier.

As China is upgrading its economy, Wang said, there is far greater complementarity than competition between the world's two largest economies. "The two countries have seen the space for cooperation expanded rather than narrowed," he said.

China's growing middle class and vast consumer market hold out great potential for American companies, said Wang, noting that in 2016 American exports to China via e-commerce surged by more than 100 percent.

In order to address trade imbalances, the Chinese vice premier called on the United States to relax its outdated regulations on export control, stressing that as the Chinese economy climbs higher on the value chain, there is huge market potential for U.S. exports of advanced technologies.

Taking integrated circuits (IC) as an example, he said that in 2016 China imported 227 billion U.S. dollars of IC products, more than the imports of crude oil, iron ore and primary plastics combined, but only 4 percent came from the United States.

According to forecasts by the U.S.-China Business Council, exports of goods and services from the U.S. to China will double to 369 billion dollars in the next decade and rise to 520 billion dollars by 2050.

In his speech, Wang stressed the importance of cooperation between the Chinese and U.S. business communities.

"Your long-standing support and active participation have helped to create an atmosphere in favor of cooperation rather than confrontation for China-U.S. business ties, and have contributed to the China-U.S. economic relationship as it stands today," Wang told the audience.

"Although there may still be twists and turns in our cooperation going forward, as long as you have confidence, the overall direction of China-U.S. business cooperation will not change," said Wang.

This is one of the four major dialogue mechanisms established by the two sides in April. Wang is scheduled to co-chair the first China-U.S. Comprehensive Economic Dialogue together with U.S. Treasury Secretary Steven Mnuchin and Secretary of Commerce Wilbur Ross.

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