A deadline could be good for trade talks, but Trump's isn't firm: Don Pittis

After weeks, months or years of negotiation, deals are always hammered out in the 11th hour. But there are reasons to think Trump's Friday deadline is no deadline at all.

A Friday NAFTA cutoff is effectively impossible

This week U.S. President Donald Trump announced a trade agreement with Mexico to replace NAFTA and told Canada to sign on or risk being left out. (Win McNamee/Getty Images)

There are few things better than a hard deadline to concentrate the minds of a group of people trying to make a deal.

Debra Steger, part of the Canadian team that hammered out the world's most most massive and complicated trade deal of all time, the Uruguay Round that resulted in the World Trade Organization, knows that from experience.

In 1993, having been at the negotiating table for a biblical-sounding seven long years, the talks looked set to go on forever. Or end in collapse.

We do not have to close this tonight or tomorrow morning or Friday afternoon.- Former Canadian foreign minister John Baird

"We sat in the same rooms with the same people saying the same things for seven years and there was no movement on anything," said Steger, who teaches law at the University of Ottawa.

Suddenly everything changed in a phone call as U.S. President Bill Clinton and the European Trade Commissioner Leon Brittan declared enough was enough, she recalled.

"The order came from, literally, on high," Steger said. The effect was amazing: within weeks the substance of the 125-country deal had been concluded.

Of course, for a deadline to work, the deadline must be real. And in this week's talks between Canada, Mexico and the United States there is evidence the deadline declared by U.S. President Donald Trump and his team isn't much of a deadline at all.

But according to Terry Daniel, who teaches negotiation to business executives at the University of Alberta, that does not take away from the fact that deadlines can be a boon to settling long, drawn-out disputes. Even thinking that the deadline is approaching can help the various parties move toward agreement.

Daniel calls it the 80-20 phenomenon.

"Eighty per cent of what goes on happens in that last little segment," he said.

Just like when each of us is haggling over rent or buying a car — an activity still known by the archaic term horse-trading — there is a lot neither side wants to reveal. The negotiating process is the gradual disclosure of how far each side would go without walking away.

The cost of walking away

The process of repeatedly walking away is a kind of negotiating tactic that is the equivalent of the long, drawn-out process in trade talks where there's "no movement on anything."

Daniel says even in far more complicated negotiations such as Canada-U.S.-Mexico trade, each side must have a "best alternative to a negotiated agreement" in mind — in other words, what they'd lose if they walked away

In all bargaining, still sometimes called horse-trading, most of the dealing gets done in the home stretch. (Peter Andrews/Reuters)

Then, as the deadline approaches, each side is forced to face up to how much they would lose with a no-deal result, leading to concessions.

One of the advantages for Canada, says Daniel, is that details of the Mexican deal show how much the U.S. is willing to concede on issues like duty-free online shopping and the sunset clause.

For Leslie Macleod, a lawyer who runs her own conflict-resolution business and teaches at Osgoode Hall law school at Toronto's York University, "Deadlines are a double-edged sword."

In things like labour negotiations, she says, deadlines that are agreed in advance can be both hard and healthy: each side knows how long they have to make their case, and the results of missing the deadline are clear.

But unrealistic deadlines imposed unilaterally by one party can go wrong, says Macleod, resulting in a failed deal, a deal with mistakes or one that creates long-term resentment in future negotiations.

'Not a hard deadline'

According to former Canadian foreign minister John Baird, Canada must not let itself be trapped in that second case.

"There's no doubt deadlines are are good, but this is a deadline established by Trump and his people and it's not a hard deadline," he said on the phone shortly after tweeting best wishes to the Canadian negotiating team.

"We do not have to close this tonight or tomorrow morning or Friday afternoon," said Baird.

Canada's Uruguay Round negotiator Steger agrees, and she thinks that while Trump may not realize it, there is no way the U.S. president can meet his own deadline.

The logic of the U.S. need for a Friday deadline is so that Trump and his team can get the deal to Congress in time to comply with its required 90-day approval process before Mexican President Enrique Pena Nieto leaves office on Dec. 1 to make way for president-elect Andres Manuel Lopez Obrador.

As someone who has been through the long and complex process of shepherding a trade deal from agreement in principle to drafting to a process called "legal scrubbing" to translation to final signature and legislative approval, Steger says that deadline is effectively impossible.

Had Trump instead wanted to cancel NAFTA and negotiate a separate U.S.-Mexico deal, he would have to give six months' notice and get Congress's approval. 

"If the intention was to negotiate bilateral agreements then they needed to go about it in a totally different way," Steger said.

"They only have the authority to negotiate a NAFTA — so, under the legislation, they have to bring Canada along."

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About the Author

Don Pittis

Business columnist



