Australia launched a formal appeal to the WTO last year, seeking a review of China’s decision to impose hefty tariffs on imports of Australian barley, one of several current sources of friction between the two countries.

“The DSB agreed to the establishment of a panel,” said the Geneva-based trade source who attended the private meeting of the WTO’s dispute settlement body.

Australian Trade Minister Dan Tehan said earlier it would submit a request for a panel. Its first request for adjudication was blocked by China last month.

However, Tehan said that Australia remained “open to further discussions with China with a view to resolving this issue.”

China said at the meeting it was confident that its duty measures would be found to be consistent with WTO requirements, the trade source said. It also remained open to continued talks on the matter.

The panel typically concludes in six months although its conclusions are subject to appeal.

Australia’s formal trade dispute submission in December was one of just five such requests made in 2020, WTO data showed, down from 20 the previous year.

The WTO’s top adjudication panel, the Appellate Body, is currently paralyzed after the administration of former U.S. President Donald Trump blocked new judge appointments.

— Reporting for Reuters by Renju Jose and Emma Farge.

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Ngorzi Okonjo-Iweala was chosen Feb. 15 by WTO members as the international trade body’s new head, making her the first woman and the first African to serve in the role.

Mary Ng, Canada’s minister of small business, export promotion and international trade, congratulated Okonjo-Iweala in a statement.

“Dr. Okonjo-Iweala’s commitment to bringing about positive change is evident in her work with international organizations and her public service in Nigeria, where she served in many leading roles, including as minister of finance, minister of foreign affairs and coordinating minister for the economy,” Ng said.

“We are pleased that — for the first time — the WTO will be led by a woman and an African, and are confident that Dr. Okonjo-Iweala will work constructively with all WTO members to ensure the organization is able to address the challenges of the 21st century.”

In a virtual press conference following her appointment, Okonjo-Iweala admitted she takes the reins at the WTO “at a time of great uncertainty and challenge.

“We have the twin side of the (COVID-19) pandemic, the health side and the economic side, which is challenging so many, including challenging livelihoods around the world, and it has hurt economic diversification in many parts of the world,” she said.

Her selection to lead the beleaguered organization comes at a time when many countries are deciding to turn inward rather than focus on multilateral trading relationships.

The dispute resolution process among member nations has been handicapped by the United States’ refusal to nominate a new member to the WTO’s appellate body.

“The WTO at this point in time is also facing so many challenges, and it’s clear to me that deep and wide-ranging reforms are needed, and as I said before it cannot be business as usual at the WTO,” Okonjo-Iweala said.

She added she would prioritize modernizing the rules of the WTO — an effort Canada in particular supports.

Ng is currently chairing the 17-nation Ottawa Group, tasked with leading efforts to modernize the WTO.

“We look forward to working with DG Okonjo-Iweala on this important work as well as other WTO initiatives that will pave the way for an inclusive, sustainable and resilient global economic recovery for Canadians and people around the world,” Ng said.

Okonjo-Iweala also spoke unprompted about the importance of agriculture to trade and the WTO’s work.

“Traditional issues like agriculture should not be forgotten, issues of industrial subsidy, agriculture subsidy, special and differential treatment, these are all very difficult areas down the line we will definitely need to look into,” she said.

Canadian producers will be eager to find out if the new WTO head will address ongoing concerns they have with international trade.

Beyond protectionist measures being taken in countries like India and Italy, trade agreements such as the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) have fallen short of expectations, in part as the EU employs technical or non-tariff trade barriers to restrict the flow of Canadian agriculture goods to member countries.

— D.C. Fraser reports for Glacier FarmMedia from Ottawa.

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Agriculture Minister Marie-Claude Bibeau, speaking Tuesday to Saskatchewan crop organizations’ virtual CropSphere conference, announced the feds’ current Canada Grain Act review has entered its consultation stage, running until April 30.

The government said it wants feedback from grain industry stakeholders on “ways to potentially update the legislation.”

Both the Canada Grain Act and its main regulatory body, the Canadian Grain Commission, were “established at a time when the Canadian grain sector looked much different than it does today,” the government said in its discussion document.

“The way grain is bought, sold, delivered and handled at facilities has changed significantly, as have buyers’ demands for grain quality… (and) it is possible that some modernization is required to ensure the system is better aligned with current and future market realities.”

Apart from some “targeted” changes, the government said, the last “comprehensive” amendments to the Act came in 1971, since which time several reforms have been proposed.

Also, the feds noted, the CGC has been working on a “grain grading modernization initiative” since 2017, “to ensure that, where possible, grain grading is continually evaluated using more scientifically-based, effective, precise and user-friendly tools.”

“The marketplace for grain has greatly evolved over the past half century, and now is the time for the Canada Grain Act to reflect that evolution,” Winnipeg MP Jim Carr, who was named Tuesday as the federal cabinet’s special representative for the Prairies, said in Bibeau’s release.

“I encourage all those with a stake in Canada’s grain industry to make their voices heard as part of this consultation.”

The consultations’ discussion document flags issues the government said “may be of particular interest” to the sector, such as:

• binding determination, which is meant to be an “independent dispute resolution mechanism” when a grower and buyer disagree on a grain’s grade or level of dockage;
• producer payment protection, the CGC-led program “to help ensure producers are protected against a buyer’s failure to pay for grain, in a cost-effective manner that fairly allocates risk;”
• the CGC’s licensing system for elevators and grain dealers, meant to maintain Canada’s grain quality assurance system, serve as a safeguard for producers and allow for collection of grain data; and
• Canada’s system of inspection, weighing and certification of grain for export.

In those cases, the government asks in its discussion documents if there are ways in which those systems and programs “could better meet the sector’s needs.”

The list of flagged issues is “not a comprehensive list of Canadian Grain Commission functions,” the government said, but is meant to highlight “practical areas that may be of interest to stakeholders.”

In the past decade alone, the government said, Canadian grain production has risen from 69 million tonnes in 2010 to 93 million in 2020, and exports from CGC-licensed elevators rose from 30.8 million tonnes in 2009-10 to 44.3 million in 2019-20.

The grains sector has also made “significant infrastructure investments” in recent years, such as in rail and port infrastructure, and has also boosted the Prairies’ primary elevator storage capacity.

“Structural changes have also affected the sector, such as reforms in wheat and barley marketing,” the government said.

Also, “technological advancements and evolving grain buyer demands also continue to shape the sector and its capacity as one of the world’s leading exporters of grain.” — Glacier FarmMedia Network

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Reuters reported last week that Mexico was working closely with U.S. Trade Representative Robert Lighthizer to close a loophole in the trade deal that allows a country to refuse to form a dispute panel.

Making that fix would ensure that Canada or the United States could form a dispute panel for alleged violations of labour or environmental rules contained in the trade deal and also give Mexico guarantees it could form such a panel for issues affecting its own interests, said Jesus Seade, deputy foreign minister for North America.

“Of course, this could not be only for the areas where the demand might eventually come from the U.S. or issues against Mexico, which is labour and environment. It would have to be something across the board,” he said in an interview with Reuters.

In May, Democratic U.S. Senator Ron Wyden wrote to Lighthizer arguing that by enabling parties to opt out of the dispute panels, USMCA repeated a weakness in the trade deal’s predecessor, NAFTA, that made it harder to enforce rules.

The U.S., Mexico and Canada signed the deal, known in the U.S. as USMCA, last November, to replace the North American Free Trade Agreement that governs more than US$1.2 trillion of mutual trade. But implementation is subject to ratification by lawmakers in all three countries.

Democrats in the U.S. Congress, largely in the Democratic-controlled House of Representatives, have threatened to stall ratification until their concerns are met.

The new trade deal had come at the behest of Republican U.S. President Donald Trump, who blamed NAFTA for millions of job losses in the United States as companies moved south to employ cheaper Mexican labour.

Seade said he was still discussing with Lighthizer how best to address the issue but that he believed the U.S. official agreed that whatever solution they found would have to be applicable across the board and not only to labour and environmental issues.

— Reporting for Reuters by Frank Jack Daniel in Mexico City.

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Ottawa is pushing back against increasing pressure by the administration of U.S. President Donald Trump and its allies to make the concessions they say are needed for the trilateral North American Free Trade Agreement.

“We’re interested in what could be a good deal for Canada but we’re going to need to see a certain amount of movement in order to get there and that’s certainly what we’re hoping for,” Trudeau told reporters in Ottawa.

Canadian Foreign Minister Chrystia Freeland met U.S. Trade Representative Robert Lighthizer for their fourth set of talks in four weeks in Washington with the two sides still disagreeing on major issues.

Freeland told reporters the talks had been constructive and said she would meet Lighthizer again later on Wednesday.

“We are a country that is good at finding compromises and that’s a talent our negotiators certainly demonstrate. At the same time, our core objective… is to defend the national interest,” she said.

Trump has already wrapped up a side deal with Mexico and is threatening to exclude Canada if necessary. Canadian officials say they do not believe the U.S. Congress would agree to turn NAFTA into a bilateral treaty.

An influential Canadian private sector union leader, in Washington for consultations with Freeland’s team, on Wednesday played down the chances of an imminent agreement.

“Do I believe there will be a deal this week? I don’t think so,” Unifor boss Jerry Dias told reporters, saying the United States would need to move on some major files.

Trump and Trudeau spoke by telephone late on Tuesday and discussed NAFTA, the Canadian prime minister’s office said in a brief statement.

The Republican chairman of the U.S. House of Representatives’ ways and means committee, Kevin Brady, told CNBC on Wednesday that “Canada needs to really step up here this week” to meet the Oct. 1 deadline set by Washington.

But U.S. Chamber of Commerce president Thomas Donohue said it would be extremely complicated, if not impossible, for the administration to pull off a Mexico-only agreement.

“If Canada doesn’t come into the deal there is no deal,” Donohue told a media breakfast in Washington.

The Chamber, the most influential U.S. business lobby, wants NAFTA to be renegotiated as a trilateral agreement, citing how highly integrated the three member nations’ economies have become since the pact came into force in 1994.

Officials are arguing over cultural protections, dispute resolution, and a U.S. demand for more access to Canada’s protected dairy market.

Dias said negotiators had spent much of the last day talking about the agricultural sector. Sources say Ottawa has made clear it is prepared to make dairy concessions, which would anger the influential industry lobby.

“For American farmers the Canadian market is a drop in the bucket. For us it’s our livelihood,” Dairy Farmers of Canada vice–president David Wiens told reporters in Ottawa.

Concessions in past trade deals had already hurt Canadian farmers, he said.

— Reporting for Reuters by David Lawder and David Ljunggren.

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Freeland spokesman Adam Austen did not give details. After more than a year of negotiations, Canada and the U.S. are still trying to resolve differences over the North American Free Trade Agreement, which also includes Mexico.

U.S. officials say time is running out to agree on a text on which the current Congress can vote. Canadian officials say they are working on the assumption they have until the end of September.

Freeland spent three days in Washington last week and said on Friday as she prepared to leave that she and Lighthizer were making very good progress in some areas, although a deal remained out of reach.

U.S. President Donald Trump, who says he is prepared to tear up NAFTA, has struck a trade deal with Mexico and threatened to push ahead without Canada.

Uncertainty over the future of NAFTA, which underpins US$1.2 trillion in trade, is weighing on markets as well as the Canadian and Mexican currencies.

Officials say the main sticking points are Canada’s dairy quota regime, Ottawa’s desire to keep a dispute-resolution mechanism, and Canadian media laws that favour domestically produced content.

U.S. Agriculture Secretary Sonny Perdue, speaking in an interview broadcast on Sunday, said Canada had to scrap a low-price milk proteins policy to reach a deal on NAFTA. U.S. farmers complain Canada is flooding export markets.

“Our farmers don’t have access to the Canadian markets the way that they have access to us. Class 7 has to go. It can’t be renamed something or called something else,” Perdue said on C-SPAN, referring to the milk class created last year by Canada to price milk ingredients such as protein concentrates, skim milk and whole milk powder.

Austen, asked whether Freeland might return to Washington later in the week, said no decisions had been taken. She is due to attend a two-day meeting of legislators from the ruling Liberal Party on Wednesday and Thursday in Saskatoon.

Prime Minister Justin Trudeau said last Wednesday he did not see the need to attend the talks for the time being.

— David Ljunggren is Reuters’ political correspondent in Ottawa.

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Senior officials from both sides are due to meet in Washington on Wednesday in a bid to settle major differences amid pressure from Washington for a quick settlement.

“There are a number of things we absolutely must see in a renegotiated NAFTA,” Trudeau told reporters in the Pacific province of British Columbia.

“No NAFTA is better than a bad NAFTA deal for Canadians and that’s what we are going to stay with.”

U.S. President Donald Trump — who signed a NAFTA side deal with Mexico last week — has threatened to impose auto tariffs on Canada or exclude it from the three-nation pact unless an agreement can be struck quickly.

Trudeau made clear, however, he would insist on keeping the so-called Chapter 19 dispute-resolution mechanism that Washington wants to scrap.

“We will not sign a deal that is bad for Canadians, and quiet frankly, not having a Chapter 19 to ensure the rules are followed would be bad for Canadians,” he said.

He also said existing protections that ban U.S. media firms from buying Canadian cultural industries such as television stations and newspapers must be maintained.

— Reporting for Reuters by Julie Gordon; writing by David Ljunggren.

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Under pressure, Canada rejoined the talks to modernize the 24-year-old North American Free Trade Agreement after Mexico and the United States announced a bilateral deal on Monday.

Canadian Foreign Minister Chrystia Freeland said late on Wednesday that talks were at “a very intense moment” but said there was “a lot of good will” between Canadian and U.S. negotiators.

“Our officials are meeting now and will be meeting until very late tonight. Possibly they’ll be meeting all night long,” Freeland said. She and U.S. Trade Representative Robert Lighthizer had agreed to review progress early on Thursday.

U.S. President Donald Trump has set a Friday deadline for the three countries to reach an in-principle agreement, which would allow Mexican President Enrique Pena Nieto to sign it before he leaves office at the end of November. Under U.S. law, Trump must wait 90 days before signing the pact.

Trump has warned he could try to proceed with a deal with Mexico alone and levy tariffs on Canadian-made cars if Ottawa does not come on board, although U.S. lawmakers have said ratifying a bilateral deal would not be easy.

“They (Canada) want to be part of the deal, and we gave until Friday and I think we’re probably on track. We’ll see what happens, but in any event, things are working out very well.” Trump told reporters at the White House.

The upbeat tone contrasted with Trump’s harsh criticism of Canada in recent weeks, railing on Twitter against Canada’s high dairy tariffs that he said were “killing our Agriculture!”

Canadian Prime Minister Justin Trudeau said he thought the Friday deadline could be met.

“We recognize that there is a possibility of getting there by Friday, but it is only a possibility, because it will hinge on whether or not there is ultimately a good deal for Canada,” he said at a news conference in northern Ontario on Wednesday. “No NAFTA deal is better than a bad NAFTA deal.”

Freeland, who is Canada’s lead negotiator, was sidelined from the talks for more than two months, and will be under pressure to accept the terms the U.S. and Mexico worked out.

She declined comment on the issues still in play, but said on Tuesday that Mexico’s concessions on auto rules of origin and labour rights had been a breakthrough.

Ottawa is also ready to make concessions on Canada’s protected dairy market in a bid to save a dispute-settlement system, The Globe and Mail reported late on Tuesday.

Sticking points

One of the issues for Canada in the revised deal is the U.S. effort to dump the Chapter 19 dispute resolution mechanism that hinders the U.S. from pursuing anti-dumping and anti-subsidy cases. U.S. Trade Representative Robert Lighthizer said on Monday that Mexico had agreed to eliminate the mechanism.

To save that mechanism, Ottawa plans to change one rule that effectively blocked U.S. farmers from exporting ultrafiltered milk, an ingredient in cheesemaking, to Canada, the Globe and Mail reported, citing sources.

Trudeau repeated on Wednesday that he will defend Canada’s dairy industry.

Earlier on Wednesday, the Trump administration’s own anti-dumping duties on Canadian paper, used in books and newsprint, were thrown out by the U.S. International Trade Commission.

The independent panel ruled that about US$1.21 billion in such paper imports from Canada were not harming U.S. producers.

Other hurdles to a NAFTA deal include intellectual property rights and extensions of copyright protections to 75 years from 50, a higher threshold than Canada has previously supported.

Some see the tight time-frame as a challenge.

“There’s nothing here that is not doable for Canada,” said Brian Kingston, vice-president for international affairs at the Business Council of Canada.

“We’ve got the best negotiators in the world, but they can only stay awake so many hours of every day.”

— Reporting for Reuters by Julie Gordon and Sharay Angulo; additional reporting by Mohammad Zargham, David Alexander, Susan Harvey, Donia Chiacu, David Lawder, Makini Brice and Jeff Mason, and Allison Martell and Anna Mehler Paperny in Toronto; writing by Roberta Rampton, Denny Thomas and David Lawder.

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With time fast running out to strike some kind of deal on the North American Free Trade Agreement, the three member nations are still far apart on major points.

Discussions in Washington will center on one particularly contentious area — the U.S. demand for tougher rules of origin governing what percentage of a car needs to be built in the NAFTA region to avoid tariffs.

“We are about to engage very seriously on what are the realities of the automotive sector of North America,” Mexican Economy Minister Ildefonso Guajardo told reporters before talks with U.S. Trade Representative Robert Lighthizer.

“It will be not just autos. There are a lot of other items that we have to review,” he said.

Other contentious chapters include the future of the pact’s dispute-resolution mechanism and a U.S. proposal for a sunset clause that could automatically kill the deal after five years.

Guajardo earlier told El Heraldo newspaper that if a deal could not be reached, “we would be operating what some analysts have called ‘Zombie NAFTA’ … (one) that isn’t dead and isn’t modernized.”

Business executives complain that uncertainty over the future of the 1994 agreement is hurting investment.

Sources close to the talks suggest there is a creeping feeling of uncertainty and pessimism going into the new round of negotiations because of gridlock on critical matters.

Lighthizer said last week that if the talks took too long, approval by the Republican-controlled U.S. Congress may be on “thin ice.” The aim is to complete a vote during the “lame-duck” period before a new Congress is seated after November’s congressional elections.

Mexico holds its presidential election on July 1 and the front-runner, leftist Andres Manuel Lopez Obrador, says he wants a hand in redrafting NAFTA if he wins.

At the heart of the NAFTA revamp is U.S. President Donald Trump’s desire to retool rules for the automotive sector in order to try to bring jobs and investment back north from lower-cost Mexico.

Mexico’s main auto sector lobby has described the latest U.S. demands, which include raising the North American content to 75 per cent from the current 62.5 per cent over a period of four years for light vehicles, as “not acceptable.”

Bureaucratic nightmare

The U.S. proposal also would require that 40 per cent of the value of light-duty passenger vehicles and 45 per cent for pickup trucks be built in areas with wages of $16 per hour or higher (all figures US$).

That could be a challenge for Mexico, where the Ann Arbor, Michigan-based Center for Automotive Research has estimated auto assembly workers on average earn under $6 an hour, and workers at auto parts plants on average earn less than $3 an hour.

Critics also say it would create a bureaucratic nightmare of paperwork.

Talks to renegotiate NAFTA started last August to fulfill a campaign pledge by Trump to bring manufacturing jobs back to the U.S.

Nine months later, the most troublesome issues remain open. The U.S. has stuck with a proposed sunset clause for the new deal, which would mean the agreement would need to be renewed every five years, a move that critics say would create huge uncertainty for businesses.

Another contentious U.S. proposal is to repatriate dispute resolution to the domestic legal system from international tribunals. Both Canada and Mexico oppose that measure, and so does U.S. business.

Asked if an agreement were possible this week, a Mexican source close to the talks said: “The possibility is there, but it will depend on whether the United States is flexible.”

Trump has frequently said he would pull out of NAFTA if a better deal was not possible, although he has sounded more positive about the deal in recent weeks.

It is unclear where the U.S. might give ground to win a quick deal. The Trump administration has embraced confrontational policies in its dealings on trade.

— Reporting for Reuters by Veronica Gomez and Anthony Esposito; additional reporting by Ana Isabel Martinez, Frank Jack Daniel and Sharay Angulo in Mexico City, David Lawder in Washington and David Ljunggren in Ottawa; writing by Anthony Esposito.

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U.S. Trade Representative Robert Lighthizer, showing impatience at the slow pace of the talks, said Mexico’s presidential election and the looming expiry of a congressional negotiating authorization in July put the onus on the U.S., Mexico and Canada to come up with a plan soon.

“We probably have a month, or a month and a half, or something to get an agreement in principle,” Lighthizer told reporters at the conclusion of a seventh round of talks to overhaul the North American Free Trade Agreement in Mexico City.

He was speaking after meeting Mexican Economy Minister Ildefonso Guajardo and Canadian Foreign Minister Chrystia Freeland for a joint event marked by a more cordial mood than in previous rounds, despite major disagreements over U.S. President Donald Trump’s plan to impose steel tariffs.

Trump has threatened to dump NAFTA unless it boosts U.S. manufacturing and employment, arguing the 1994 accord has caused the migration of jobs and factories southward to lower-cost Mexico.

Guajardo told reporters the three countries aimed to hold lower-level discussions on NAFTA over the next five weeks before an eighth round, probably in early April.

During that period, he and his two counterparts also aimed to meet to narrow differences on the most complex issues in the talks, which include agreeing on new auto content rules, a dispute-resolution mechanism and agricultural market access.

Lighthizer said time to rework the deal was running “very short” and again raised the possibility of the U.S. pursuing bilateral deals with its partners — albeit stressing that his government would prefer a three-way agreement.

He said the U.S. was making more headway with its southern neighbour than with Canada.

Freeland declined to give details on a prospective timeline for the next round and said alongside Lighthizer that Trump’s plan to impose a 25 per cent tariff on steel imports and a 10 percent tariff on aluminum imports was “unacceptable.”

U.S. trade promotion authority (TPA) is authorized by Congress and is needed to implement legislation for new trade agreements such as the renegotiation of NAFTA. The TPA expires on July 1 and analysts expect it to be extended.

The U.S. also holds congressional elections in November.

Tariff exemption lure

Early on Monday, the U.S. president ratcheted up tension before the ministerial meetings in Mexico by tweeting that “Tariffs on Steel and Aluminum will only come off if new + fair NAFTA agreement is signed.”

Lighthizer said that meant Canada and Mexico would enjoy tariff exemptions once a NAFTA deal was reached, calling the tariffs an “incentive” to conclude the talks.

Canada and Mexico say they should be exempted from such moves, and have warned they could retaliate.

Guajardo said there would be no concessions made in the NAFTA negotiations to placate Trump on steel and aluminum, while Freeland said the two issues were separate.

Guajardo urged all sides, however, to avoid a trade war and said Mexico would wait for a U.S. decision. If the U.S. did impose tariffs, a response should be tailored to the sector in question to avoid complicating other issues, he added.

“Contaminating strategies just ends up making you escalate the nature of the conflicts,” Guajardo said.

Trump early Monday also tweeted that Canada “must treat our farmers much better. Highly restrictive,” and Mexico “must do much more on stopping drugs from pouring into the U.S.”

Talks to overhaul the 24-year-old pact are moving slowly, in part because Canada and Mexico have resisted U.S. demands to boost the North American content of autos produced inside NAFTA.

When asked about the discussions on the rules of origin for autos, Guajardo noted that no trade deal could depend only on the interests of one particular sector.

Although Mexico holds its election in July, it will not change governments until December, and Guajardo pledged to keep negotiating for as “as long as necessary” while President Enrique Pena Nieto’s administration is in office.

Lighthizer said only six chapters had been concluded since talks began in August. Negotiators are working on 30 chapters overall, he said, including a new one on energy.

Uncertainty over the talks, and the potential for a wider global trade war, are making investors nervous.

During the latest round, negotiators concluded talks on rules governing food safety and animal health, good regulatory practices, plus administration and publication, officials said.

— Reporting for Reuters by Lesley Wroughton and Sharay Angulo; additional reporting by David Ljunggren, Dave Graham, Adriana Barrera and Anthony Esposito in Mexico City and Fergal Smith in Toronto; writing by Lesley Wroughton and David Ljunggren. Includes files from AGCanada.com Network staff.

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