August 19, 2017 / 5:47 PM / 2 years ago

Veteran NAFTA negotiators likely to deflect political pressures

WASHINGTON (Reuters) - The three trade officials leading the North American Free Trade Agreement negotiations are veterans in their field who will be able to resist political pressure for major rapid changes as the pace of talks intensifies, trade and legal experts say.

U.S., Canadian and Mexican negotiators opened talks this week on updating NAFTA, which U.S. President Donald Trump has threatened to scrap unless it helps to shrink the U.S. trade deficit and bolster American jobs.

Yet it would be hard to find men less likely to make radical changes than John Melle of the United States, Steve Verheul of Canada and Kenneth Smith of Mexico, the three nations’ chief negotiators.

Melle, Verheul and Smith, who have decades of experience between them, come from a world where negotiations can take years to conclude, with months of bargaining over single clauses.

“These are orthodox trade law negotiators...none of these guys is going to be freelancing,” said Laura Dawson, director of the Washington-based Woodrow Wilson’s Canada Institute, who has worked closely with Melle and who knows Smith.

Delegates say they expect the talks to intensify when officials reconvene in Mexico in September.

The talks on NAFTA - which came into force at the start of 1994 - are particularly complex. Officials are sitting at 28 different tables and sensitive topics include American demands on procurement, rules of origin and measures designed to cut a big trade deficit with Mexico.

One option for Mexico and Canada would be to reject some U.S. proposals, forcing Melle to tell the White House he had reached an impasse.

“Then they either have to leave the negotiations or dial back their demands,” said Dawson.

Verheul, who spent the better part of a decade negotiating a free trade deal between Canada and the European Union, said on Monday that talks had a life of their own.

“I’ve predicted the end of negotiations many times and I have usually been wrong,” he told Canadian legislators.

Melle has in the past publicly expressed his support for the original version of NAFTA, which Smith helped negotiate.

Mexico and the United States want the talks to be wrapped up by the end of the year. But Canadian officials dismiss the idea NAFTA can be revamped quickly and say it would take least two years to push through the changes that Trump wants, even if Canada and Mexico agreed to them.

Trump looks increasingly beleaguered amid a series of controversies and whether he could afford politically to scrap NAFTA is in some doubt, especially since U.S. businesses and industry groups are already becoming more vocal in their defense of the pact.

One of the most vocal NAFTA opponents inside the Trump administration, chief strategist Steve Bannon, lost his job on Friday. Another skeptic, White House trade advisor Peter Navarro, is still in place.

As candidate and then president, Trump has repeatedly described NAFTA as “a disaster” that hurt U.S. manufacturing by encouraging firms to relocate plants and hundreds of thousands to jobs to Mexico, where costs are cheaper. Experts, though, blame increasing automation for some of the lost jobs.

Most of the officials negotiating know each other and work according to a set of longstanding rules on how trade talks should be run, said a source close to the talks.

“The trade world is small, it has been beneficial to career officials from the three countries that have an acquired knowledge,” said the source.

Melle joined USTR in 1988 at a time when the agency was completing bilateral trade negotiations with Canada.

Robert Holleyman, who worked with Melle as a former deputy U.S. Trade Representative during the Obama administration, called him a top-notch negotiator who has seen every type of tactic over a nearly 30-year career at the agency.

Verheul bonded with Foreign Minister Chrystia Freeland over the EU free trade deal and she regularly praises him in public.

People who have worked with Verheul stress his ability to remain calm under pressure.

“Steve is world class ... I never once saw him lose his composure or lose that poker face he’s so famous for,” said former Canadian cabinet minister Gerry Ritz.

Additional reporting by Anthony Esposito, Lesley Wroughton and David Lawder in Washington; editing by Diane Craft

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