The sixth round of negotiations on NAFTA, the North American Free Trade Agreement, is underway in Montréal. The outcome of the talks could have a significant impact on Vermont businesses that export goods to Canada and Mexico.
The two countries made news as the talks opened by announcing a separate free trade deal: a newly revived Trans-Pacific Partnership with 11 nations in the Pacific Rim. Withdrawing the U.S. from that dealwas one of President Donald Trump's first acts in office.
As talks began, Trump said they were going "pretty well," but he has also said that he will withdraw the United States from the agreement should he feel that not enough progress has been made.
Those two statements are framing discussions by delegates from Canada and Mexico who are bracing for the next move by the U.S.
More from VPR: Vermont Exports To Mexico Could Take A Hit Should NAFTA Change
Vermont has a big stake in the outcome. From auto parts to food to apparel, Vermont manufacturers have leveraged NAFTA to export their products to Canada and Mexico duty-free as part of an integrated North American economy.
In Vermont, business people like Jean-Marc Landry — whose company Pratiko depends on duty-free access across NAFTA's borders — are watching events unfold in Montréal.
Landry manufactures an automatic braking system that is added to wheelchairs to keep them in place when a patient stands up.
"One of the problems that we have with the wheelchair is that they kind of roll away," he says, explaining the genesis of his technology.
Landry manufactures parts in Lyndonville, Vermont, and Richmond, Québec. He invented the technology after his grandmother tried to get up from her wheelchair and it rolled away.
"She fell on the ground. She broke her hip and then she was admitted in long-term hospital," Landry says.
Landry is now bringing parts from Québec to Vermont for assembly in Lyndonville.
He said he chose to locate his U.S. operation in Vermont because of a host of attributes that he sees as unique to the state.
In addition to Vermont's strategic location with a 90-mile border with the province of Québec, Landry says he enjoyed access to top state government leaders — something that he said stood in contrast with the other states he had considered, including New York, Virginia and Texas.
"Without the NAFTA, it's going to make the parts more expensive on both sides." — Jean-Marc Landry, who has manufacturing facilities in Québec and Vermont
Landry praised the work of the Northeastern Vermont Development Association, or NVDA, a nonprofit organization that promotes business development.
Landry said the NVDA had helped him set up shop with an affordable rent in an industrial park in Lyndonville. He also said he was attracted to Vermont by the positive reputation of its labor force.
However Landry said before those considerations, his move into the U.S. market was premised on NAFTA's tariff-free environment.
"Without the NAFTA, it's going to make the parts more expensive on both sides," he said, adding that the higher cost of production would eventually be passed on to consumers — a scenario that is not comforting to a small business owner.
Landry has heard about the lack of progress in the previous five rounds of NAFTA negotiations.
It may be public posturing to try and trigger a U.S. response, but recent statements by senior Canadian officials do not inspire confidence that a resolution is near.
Rona Ambrose, a member of the Canadian government's NAFTA Advisory Council, told Canada's CTV it's not a matter of if, but when the U.S. withdraws from the agreement.
"Right now there is just a complete lack of flexibility on the American side. It's basically their way or the highway," said Ambrose.
The U.S. wants a new rule that would mandate that cars shipped duty-free from one NAFTA nation to another contain 50 percent U.S.-made components. That's not a realistic demand, said Flavio Volpe, president of the Automotive Parts Manufacturers' Association.
"There's no movement," Volpe said of the American negotiating team. "So that's not, creative."
Vermont-based Birgit Matthiesen is observing the talks. She runs the cross-border practice at a large Washington, D.C. law firm.
"The ground has shifted for a lot of manufacturers," she said outside the negotiation hall at a downtown Montréal hotel.
Matthiesen represents clients in the three NAFTA nations. She has also briefed members of the administration of Gov. Phil Scott on the progress, or lack of it, in the negotiations.
"What is at stake here for Vermont is for a successful NAFTA that promotes Vermont's cross-border trade to compete in our own backyard in North America," says Matthiesen.
"What is at stake here for Vermont is for a successful NAFTA that promotes Vermont's cross-border trade to compete in our own backyard in North America." — Vermont-based Birgit Matthiesen, who runs the cross-border practice at a large Washington, D.C. law firm
Hassan Yussuff heads the Canadian Labour Congress, Canada's largest labor movement, and he represents more than 3 million workers. Yussuff told CBC Radio that NAFTA uncertainty cuts both ways.
"Given the degree of trade we do with the United States, it's not just us having access to their market. It's also about them having access to our market. So the uncertainty, while we're obviously going to be worried, I think the Americans should not take us for granted," Yussuff said.
Matthiesen says doubts about NAFTA aren't good for business.
"The negotiations need to come to a conclusion soon because companies in North America cannot make long-term plans for their competitiveness in an era of uncertainty," she says.
Talks are not scheduled beyond March, when a seventh round is set to take place.
Absent an agreement, Trump will have three choices: start the process of canceling NAFTA as he has threatened to do, stay in the negotiations, or hold off for a few months as Mexico elects a new president in July and the U.S. prepares for midterm elections in November.
Correction 1/28/2018 5:07 p.m. A previous version of a photo caption in this post misspelled Oscar Albín's last name. It has now been corrected.
Correction 1/29/2018 10:02 a.m. A previous of this version of this post and accompanying audio misidentified Birgit Matthiesen's job title. Both have been corrected.
