The Opening of the Northern Sea Routes: The Implications for Global Shipping and for Canada’s Relations with Asia

All the excitement around the great possibilities that the opening of the Northwest Passage could offer the shipping industry — and Canada — could not last. Just a few years ago, as sea ice in the North seemed to be steadily melting away, observers were eagerly tallying up the savings in time, fuel and costs that a reliably ice-free route across the top of the planet would provide for shippers. A couple of trial runs only confirmed that for shipments from Asia to Europe or North America, or the other way around, the route could shave thousands of kilometres off each trip, compared to journeys through the Suez or Panama canals. Rapid growth in shipping traffic across the Northwest Passage and its sister route, the Northern Sea Route, seemed not just inevitable, but imminent. Just a short while later, it now seems neither imminent nor inevitable. The retreat in sea ice may persist, but it is evident that due to regular fluctuations in ice coverage, the Northwest Passage will not be reliably ice-free for many, many years, if ever. Shipping may be more possible through the Northwest Passage than it was in the past, but it will not be consistently unobstructed. The challenges of ice combined with Arctic weather conditions may well mean that any shipping through the passage is slower than expected. Other complicating factors include uncharted or poorly charted sea lanes and the difficulty in securing insurance for Arctic shipping. At the same time, the competition from alternate routes is only becoming more intense, with expansions in both the Suez and Panama Canals and the potential for a new canal across Nicaragua. Regarding the Northwest Passage, Canada lacks much of the infrastructure in the North that would make Arctic passage a strong competitor, including multiple ports enroute and sufficient icebreaking equipment. There are still advantages that might draw some shipping away from traditional routes to the northern passages, particularly for the movement of western resources to growing Asian markets. But even moderate levels of shipping through the Northwest Passage do have the potential to change Canada’s relationship with its Asian trading partners, especially China. The Canadian and Chinese governments share a number of priorities regarding the Arctic, including environmental protection, safer navigation and resource development. These will provide opportunities for more dialogue and engagement between the two countries. While the Northwest Passage may not become the important trans-shipment route to Asia once imagined by enthusiastic observers, the most meaningful impact that a more useful route may provide is to alter, and improve, the course of Canada’s relations in the Asia-Pacific region.This paper seeks to examine likely developments and trends in Arctic shipping given the shrinkage of the polar ice cap, and to situate these trends in the broader context of changing global maritime and trade realities with particular focus on their impact on trade with Asia. There are implications for Canada and its relations with Asia, especially China, that flow from these developments

Canada’s New Indo-Pacific Strategy: A Critical Assessment

Canada’s Indo Pacific Strategy (IPS), built around five program objectives and funded at CAD$2.3 billion over the initial five year period, has been finally unveiled although details of implementation are generally lacking at present. The strategy lays out an ambitious plan for Canada’s re-engagement with parts of the Indo Pacific region that it has neglected, in relative terms, for a number of years while simultaneously trying to address the challenge of China. The Strategy is a welcome blueprint for diversification of Canadian engagement across various sectors, with ASEAN centrality a key component and closer engagement with North Pacific partners such as Japan and Korea and South Asia, in particular India, constituting core elements, yet the IPS does not close the door on relations with China or propose a decoupling strategy. China is both at the heart of the IPS, and yet not a focus of most of the initiatives. The trade-off for including China in the Strategy seems to have been to vocally demonstrate Canada’s anti-China credentials (to the US and the Canadian public) by talking tough in order to set the stage for more limited forms of ongoing cooperation. This includes calling out Beijing’s activities in a number of areas, including domestic interference in Canadian affairs. There is also a strong infusion of “Canadian values” throughout the document. A risk for Canada is that the Manichean view of China is not shared by many of the countries in the Indo Pacific region that are the targets of the Strategy, and Canada will need to be careful to ensure that strengthening relations with other countries that are targets of the Strategy is based on its own merits and regional priorities and is not portrayed simply as an antidote to expanding Chinese influence. Furthermore, given Canada’s past sporadic engagement with the region it is important that a detailed action plan be put in place quickly. The Trudeau government should be aiming for an “early harvest” for some of the initiatives to avoid the impression of a quick announcement followed by a distinct lag in implementation

THE U.K. APPLIES TO JOIN THE CPTPP: WHAT ARE THE IMPLICATIONS FOR CANADA?

     The U.K’s request to join the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) could be a tremendous boon for this bloc. The CPTPP has 11 members at present, including Canada. However, four members — Peru, Chile, Malaysia and Brunei — have yet to complete the ratification process. The U.K.’s potential accession could lead the CPTPP to develop further in response to renewed interest from present and prospective members.  Canada and the U.K. have already been discussing interim trading arrangements in the form of the Trade Continuity Agreement (TCA), which replaces existing rules designed when the U.K. was still a member of the European Union. Both countries have committed to reaching a new, permanent bilateral agreement by 2024. If the U.K. joins the CPTPP, Canada will thus end up negotiating two trade agreements with the same country at the same time.  Canada is unlikely to win additional access to the U.K. market beyond what it enjoys through the TCA. At the same time, Canada is unlikely to grant the U.K.    additional access to protected sectors through the CPTPP. But this doesn’t mean that Canada has nothing to gain from the U.K. joining the CPTPP.  The addition of a substantial economy like the U.K. to the CPTPP could prompt the four foot-dragging members to complete ratification. Without that, they will have no say in the negotiations over the U.K.’s accession or the outcome. The U.K.’s experience could also encourage non-members like South Korea and Taiwan to take the plunge and apply to join the pact.  The United States was an original member of the CPTPP’s precursor, the Trans-Pacific Partnership, but pulled out during the Trump administration. The U.K’s entry may not be enough to convince the new government to change course and so far, the Biden administration has not signalled that accession is a priority.  Still, the U.K.’s admission has the potential to expand the trading bloc and Canada should make the most of this. It does require the careful adjustment of any potential Canadian concessions granted as part of the CPTPP accession negotiations against the need for leverage in future bilateral trade negotiations with the U.K. But this balancing act shouldn’t prevent Canada from supporting the U.K.’s request to join the CPTPP. The opportunities and rewards over the long term are too substantial for any other decision.&nbsp

Canada’s Progressive Trade Agenda and a Free Trade Agreement with China: Are They Incompatible?

Negotiating a free trade agreement (FTA) with China will be very different from negotiating one with a country that shares Canada’s Western values. However, an FTA with China makes good economic sense, and while there are some unique obstacles to reaching such an agreement, they are not insurmountable. In fact, Canada can use the same models in negotiating with China that it has used with Western countries. Such an approach combines trade goals with respecting Chinese cultural and political differences, particularly those that fall into the category of progressivism. This category includes labour rights, Indigenous and gender issues, and governance. Prime Minister Justin Trudeau’s government is focused on progressive elements in trade deals, while China has made it clear it is not interested in including them in any such pact. Concluding an agreement means that China and Canada must both recognize the political requirements and dynamics on the opposite side of the negotiating table, while seeking common ground diplomatically. Side agreements such as those that exist in NAFTA and in the Comprehensive Economic and Trade Agreement (CETA) are one way to work with the two countries’ differences. Many of the provisions in a side agreement are not binding and thus not subject to the agreement’s dispute settlement mechanism or trade sanctions. Instead, they are more aspirational and sometimes lay out a process for civil society groups to raise issues and help the thinking on those issues evolve, rather than simply holding the parties accountable for breaches. Canada is rightly concerned about Chinese stances on human rights, labour, environmental and gender issues. However, instead of including these issues in the main document on trade, they can be dealt with as shared interests between the two countries. Establishing separate but parallel mechanisms to deal with these issues would be a practical way to make progress. Focusing on micro, small and medium-sized businesses as one Chapter of the Trans-Pacific Partnership (TPP) did, could be another successful approach. Women own many of these businesses in developing countries, so such a focus would make a substantial contribution to their welfare. None of this means Canada should kowtow to China or look the other way on important values and issues. Side agreements and special focuses have formed parts of agreements with other countries that already share Canada’s Western values. This type of give-and-take is present even when Canada negotiates with countries that are not polar opposites. No country’s interests are exactly the same as those of any other and it’s unrealistic to expect unanimity on every issue. Language and firm commitments on progressive issues are still evolving in many of Canada’s free trade agreements. It would be unreasonable to hope that everything can be achieved in an agreement with China on the first go-around. Rather, viewing an FTA with China as a work-in-progress means controversial elements can be brought into the negotiations and language used that reflects the understanding that these issues are evolving. It will require creative thinking, flexibility and joint commitment to find a solution, but it should be possible without having to resort to creative ambiguity.Nonetheless there are good economic reasons for Canada (and for China) to pursue bilateral trade negotiations. This paper argues that there are ways to meet the objectives of both sides by borrowing models from NAFTA, the trade agreement with the EU (CETA) and the Trans-Pacific Partnership (TPP). The NAFTA side agreements on labour and the environment offer one option while the Canada-EU Strategic Partnership Agreement offers another model. In practical terms, focus on Small and Medium Sized Enterprises (SMEs) in a Canada-China agreement, modeled on the TPP, would make a concrete contribution to the welfare of female and indigenous businesses. Shared interests in labour and environmental standards as expressed through their common membership in the International Labour Organization (ILO) and the Paris Climate Accord provide Canada and China with another way to identify convergence of interests. While these issues may not be formally incorporated into the text of a bilateral trade agreement, joint cooperation by Canada and China on these subjects would affect trade outcomes over the longer term. Equally important, it would allow both sides to proceed with negotiations while remaining faithful to their overriding domestic political objectives and imperatives. Further delay in starting negotiations raises the risk that the joint interest of both parties in proceeding will be hijacked by extraneous factors, and the window of opportunity will close. Political will and creative and flexible negotiation mandates are needed on both sides, allowing the two countries to find a way to meet their respective negotiating objectives. Each needs to accept a slightly different package in design and wording, recognizing the political requirements and dynamics they each face, while finding the diplomatic common ground that will allow them to proceed.

Canada’s Approach to the TPP, the CPTPP and CPTPP Expansion: From Disinterested Observer to Ardent Supporter

Canada has undergone a remarkable metamorphosis in its relationship to the Trans-Pacific Partnership (TPP) and its offshoot, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the CPTPP (comprising Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam). Initially a disinterested and disengaged observer of the developing TPP process back in 2006–09, by 2011–12 Canada underwent a conversion to become a determined, almost desperate suitor seeking to gain entry to the TPP club. It finally succeeded, but a change of government in 2015 led to a re-evaluation of the decision to accede to the TPP, under pressure from anti-globalization forces. Effectively, Canada sat on its hands for over a year until the U.S. had determined its final position. Then, after the TPP’s impending collapse, when the United States under then president Donald Trump announced its withdrawal, Canada changed tack once again and decided to work with Japan and others to rescue the agreement. However, during the negotiations to adapt the original TPP into the TPP-11 agreement (which became known as the CPTPP), Canada earned a reputation as a difficult and demanding partner, pushing its “progressive trade agenda” and slowing down the process. Indeed, Canada is often seen as trying to impose very progressive values on a region with little receptivity for such views. The cultural-exemption and auto-trade issues were of principal concern to Canada. Through its policy positions and negotiation style, Canada under the Trudeau government almost scuttled the CPTPP process and risked finding itself locked out once again. Quick action was taken to stem the damage and Canada became not only a signatory, but one of the first six countries to ratify the CPTPP, bringing it into force on December 30, 2018. Today, Canada has fully embraced the CPTPP, situating it as an important leg in its developing Indo-Pacific strategy, and is open to considering expansion to new members who are able and willing to meet the CPTPP’s high standards.  Deborah Elms, in her essay “The Origins and Evolutions of TPP Trade Negotiations”(Elms, 2016, 29-49), sketches out the history of how the TPP came into being, starting with the “P4 agreement” (between Singapore, Chile, New Zealand and Brunei) in June 2005. That agreement, technically called the Trans-Pacific Strategic Economic Partnership, came into effect “with very little attention” (Elms, 2016, 30) and was incomplete. It did not cover investment or financial services, which were to be left for later negotiation. When the parties finally got around to discussing the two missing chapters in February 2008, the United States joined the discussions. In September 2008, a couple of months prior to the Asia-Pacific Economic Cooperation (APEC) summit to be held in Lima, Peru in November, the U.S. announced that it would seek to join the agreement in its entirety. This set the stage for announcements at that meeting of other countries joining the talks, namely Australia, Peru and Vietnam. Now there were eight. What about Canada? At the Lima summit, attended by then prime minister Stephen Harper and then international trade minister Stockwell Day, Canada expressed no interest in getting on board, much to the frustration of accompanying officials (Stephens, Conversation). Elms states (2016, 40) that Canada had expressed interest in joining earlier but had been rebuffed over concerns regarding the supply management system that it maintains for dairy, poultry and eggs. Dairy is a particular concern for both the United States and New Zealand. However, senior Canadian officials closely involved with APEC and trade policy at the time told the author that Canada had been invited to join the P4 agreement in the early days, by New Zealand, but had refused (Sloan; Plunkett). The assessment was that Canada had little to gain, as it already had an agreement with Chile, at the time was negotiating one with Singapore (which was never completed) and had little to gain from an agreement with New Zealand, given the political need to defend the dairy industry. There are various explanations for Canada’s lack of interest in 2008–09. Part of the reasoning was domestic. The Conservative government of Stephen Harper was in a minority situation and would remain so until Harper won his first majority in 2011 (after two minority governments in which he was prime minister). Despite the Conservatives’ support for trade liberalization, it was a hot-button issue and anti-globalization sentiments were vocal, in Canada and in other countries. The Harper government was dealing with the 2008 financial crisis and was focused very much on the U.S. market and NAFTA. The initial coolness toward the P4 continued to apply, and from the perspective of trade negotiating resources, Canada was already fully engaged in negotiations with South Korea and the EU. There was concern that if Canada entered the TPP negotiations, it would have to make additional market concessions beyond those already conceded in NAFTA, but with little likelihood of getting additional concessions from the U.S. Yet, in the end, it was probably NAFTA that changed the position of Harper vis-à-vis the TPP. Both Canada and Mexico had preferential access to the U.S. market through NAFTA.There was growing concern in both countries that the TPP could be a back door to the U.S. market, undermining the value of NAFTA concessions. Autos were a particular concern. Canada and Mexico concluded therefore that they needed to be at the negotiating table.In essence, Canada decided to try to enter the TPP tent for defensive reasons, although the possibility of Japan eventually joining was an additional factor, given Canada’s longstanding desire to improve its access to the Japanese market and the limited prospect that a bilateral agreement would be concluded in the foreseeable future (Ciuriak 2018). That realization kicked off a series of meetings with officials from TPP-negotiating states, since admittance of new negotiating partners required a unanimous decision of the existing members. But, as in many things, the United States played an outsized role. The U.S. initially was not helpful, especially at the officials level. It is not fully clear why, but anecdotally the author was told by U.S. trade officials that the addition of Canada would “complicate” matters. Canada’s unhelpful position on trade in dairy products was certainly a factor. Canada pushed its advocacy to the political level and Canadian participation in the TPP was a major topic of discussion between Harper and then president Barack Obama at the 2011 Honolulu APEC summit. At that meeting, Obama “welcomed” Harper’s expression of interest in seeking to join the TPP talks and initiating consultations toward that goal (White House 2011)

Could or Would the U.S. Retaliate Against the Online Streaming Act (C-11) Now That it is Law?

Canada has just enacted legislation to give the broadcast regulator, the Canadian Radio- television and Telecommunications Commission (CRTC), authority to regulate online streaming platforms, both domestic and international. This legislation, known as Bill C-11as it passed through an extensive parliamentary review process, was highly controversial. The bill empowers the CRTC to review and possibly amend the definition of “Canadian content.” It will also require that streaming services contribute financially to the production of Canadian content and will impose “discoverability” requirements on digital streaming platforms (like YouTube, Spotify, Netflix and others) to ensure that Canadian content is promoted. The CRTC will have broad leeway to issue and enforce regulations to achieve these ends. The U.S. high-tech and streaming industry does not like this legislation and has usedvarious tactics to oppose it. Among these are arguments that C-11 violates commitments that Canada made to the United States in the Canada-U.S.-Mexico Agreement (CUSMA), the replacement for NAFTA, and that implementation of C-11 will result in U.S. trade retaliation. This paper analyzes the arguments to this effect put forth by the U.S. tech industry’strade association, the Computer & Communications Industry Association (CCIA), and refutes them, particularly the argument that Canada will need to invoke CUSMA Article 32.6 (the cultural exception clause) to justify its actions. At the same time, the paper cautions that the CRTC needs to be careful with respect to imposing a requirement on foreign streamers to contribute to Canadian production if at the same time it denies them the ability to acquire and exploit the production they have helped finance when no such limitation is imposed on equivalent Canadian streaming services

The NAFTA Negotiations — and Canada’s Priority Watch List Designation: It’s all about the Leverage

Negotiating tactics can often appear harsh, but when the United States Trade Representative (USTR) placed Canada on its Priority Watch List (PWL), the move went beyond the standard give-and-take of renegotiating the North American Free Trade Agreement. Canada – a nation that believes in the rule of law – joins China, Algeria, Kuwait and Venezuela, to name just a few, on the PWL list for its alleged “worst” record in intellectual property standards. Granted, Canada has room for improvement in this area, but for the USTR’s annual Special 301 report to place it on the PWL is hardly credible. It is no coincidence that Canada, the only G7 country—and virtually the only western country-- to make either the PWL and the USTR’s lesser Watch List (WL), is also in the midst of renegotiating NAFTA with the United States and Mexico. The 301 process has always been political to some degree, but using it as a negotiating hammer with which to hit Canada over the head risks devaluing its importance in identifying genuine shortcomings in the IP realm that affect U.S. and Canadian businesses. The report is on target in identifying several IP areas requiring more rigorous attention from Canada, including counterfeit goods in transit and copyright issues. However, the U.S. is also unhappy with changes to Canadian pharmaceutical patent regulations and protectionist matters arising from the Canada-EU Trade Agreement that have to do with European geographical indications. Still, although Canada is not alone in the latter area, no European country is on the WL. Ironically, the U.S. Chamber of Commerce’s own ranking of 50 world economies on their IP standards shows that Canada improved in four out of six categories, coming in 18th among the 50. Venezuela, with whom Canada shares the notoriety of being on the PWL, was 50th out of 50. Clearly, Canada’s new ranking does not reflect reality and is a blatant negotiating tool, but the USTR appears less interested in the collateral damage it may cause as long as the U.S. can get the concessions it wants at the table. This is a game that two can play, however, and Canada’s turn at hardball may come if the U.S. decides one day that it wants to rejoin the latest incarnation of the Trans-Pacific Partnership, from which it so hastily withdrew when Donald Trump was elected president.

Canada and Associate Membership in the Pacific Alliance: An Important Part of a Global Trade Strategy

There has been considerable coverage lately of Canada’s ongoing efforts to secure preferential access to overseas markets in Asia, while trying to save NAFTA and promote its “progressive” trade agenda. The “progressive” trade agenda hit a few recent road bumps, first in Vietnam in November when a planned announcement of an “agreement in principle” on the “TPP 11 Agreement” was postponed at the last minute, and in December in Beijing when Chinese authorities balked at including additional “progressive” chapters in a free trade agreement, the negotiation of which many expected would be announced during Mr. Trudeau’s visit. Although a breakthrough on the TPP11, now known as the Comprehensive and Progressive Trans-Pacific Partnership, was announced on January 23, NAFTA negotiations continue to be difficult. One area that has been overlooked in all the coverage of recent events, and which holds potential for advancing Canadian trade interests in both Latin America and the Asia Pacific, is the Pacific Alliance and Canada’s pursuit of associate member status. The PA trade pact, comprising Chile, Colombia, Mexico and Peru, is currently in the process of discussing with several countries, including Canada, the possibility of becoming “associate members.” Associate member status is novel, thus it is not clear what precisely it will entail or when it will come into effect. However, the possibility of Canada moving from its current "observer" status to becoming a more active part of the PA (or possibly an expanded version of the Alliance), offers significant benefit for Canada. For all the focus on the TPP and the NAFTA renegotiations, not to mention Canada’s recently concluded economic partnership agreement with the EU and potential free-trade negotiations with China, very little attention has been paid in Canada to the developments with the PA. And yet, this is one trade bloc that holds some of the greatest promise for Canada. All four founding countries are historic allies of Canada with likeminded systems of values of trade openness. Canada already enjoys strong bilateral relations with each of the PA members, but a multilateral agreement could offer Canada far more in terms of market integration. The PA also happens to offer Canadian exporters a very attractive market, with a population of 219 million, a very young average age (29.8 years) and a GDP per capita, at US$17,500, higher than that of China’s US$14,600. The PA nations are all also ranked among the most hospitable places to do business in South America. Meanwhile, as the Regional Comprehensive Economic Partnership (RCEP) involving 16 Asia Pacific nations moves closer to reality, there are suggestions that it could someday merge with the PA, possibly opening the door for Canada to yet more opportunity comprising half the world’s population and 40 per cent of its GDP. First Canada has to make the most of its opportunity to become an associate member of the PA. With the NAFTA negotiation crisis occupying so much bandwidth in Ottawa, there is a risk that the PA opportunity might not get the attention it deserves. Canadians should hope that it does. Because if NAFTA ends up failing, the PA could provide some of the new trade opportunities Canada will desperately need

Canada’s Progressive Trade Agenda and a Free Trade Agreement with China: Are They Incompatible?

Negotiating a free trade agreement (FTA) with China will be very different from negotiating one with a country that shares Canada’s Western values. However, an FTA with China makes good economic sense, and while there are some unique obstacles to reaching such an agreement, they are not insurmountable. In fact, Canada can use the same models in negotiating with China that it has used with Western countries. Such an approach combines trade goals with respecting Chinese cultural and political differences, particularly those that fall into the category of progressivism. This category includes labour rights, Indigenous and gender issues, and governance. Prime Minister Justin Trudeau’s government is focused on progressive elements in trade deals, while China has made it clear it is not interested in including them in any such pact. Concluding an agreement means that China and Canada must both recognize the political requirements and dynamics on the opposite side of the negotiating table, while seeking common ground diplomatically. Side agreements such as those that exist in NAFTA and in the Comprehensive Economic and Trade Agreement (CETA) are one way to work with the two countries’ differences. Many of the provisions in a side agreement are not binding and thus not subject to the agreement’s dispute settlement mechanism or trade sanctions. Instead, they are more aspirational and sometimes lay out a process for civil society groups to raise issues and help the thinking on those issues evolve, rather than simply holding the parties accountable for breaches. Canada is rightly concerned about Chinese stances on human rights, labour, environmental and gender issues. However, instead of including these issues in the main document on trade, they can be dealt with as shared interests between the two countries. Establishing separate but parallel mechanisms to deal with these issues would be a practical way to make progress. Focusing on micro, small and medium-sized businesses as one Chapter of the Trans-Pacific Partnership (TPP) did, could be another successful approach. Women own many of these businesses in developing countries, so such a focus would make a substantial contribution to their welfare. None of this means Canada should kowtow to China or look the other way on important values and issues. Side agreements and special focuses have formed parts of agreements with other countries that already share Canada’s Western values. This type of give-and-take is present even when Canada negotiates with countries that are not polar opposites. No country’s interests are exactly the same as those of any other and it’s unrealistic to expect unanimity on every issue. Language and firm commitments on progressive issues are still evolving in many of Canada’s free trade agreements. It would be unreasonable to hope that everything can be achieved in an agreement with China on the first go-around. Rather, viewing an FTA with China as a work-in-progress means controversial elements can be brought into the negotiations and language used that reflects the understanding that these issues are evolving. It will require creative thinking, flexibility and joint commitment to find a solution, but it should be possible without having to resort to creative ambiguity. Nonetheless there are good economic reasons for Canada (and for China) to pursue bilateral trade negotiations. This paper argues that there are ways to meet the objectives of both sides by borrowing models from NAFTA, the trade agreement with the EU (CETA) and the Trans-Pacific Partnership (TPP). The NAFTA side agreements on labour and the environment offer one option while the Canada-EU Strategic Partnership Agreement offers another model. In practical terms, focus on Small and Medium Sized Enterprises (SMEs) in a Canada-China agreement, modeled on the TPP, would make a concrete contribution to the welfare of female and indigenous businesses. Shared interests in labour and environmental standards as expressed through their common membership in the International Labour Organization (ILO) and the Paris Climate Accord provide Canada and China with another way to identify convergence of interests. While these issues may not be formally incorporated into the text of a bilateral trade agreement, joint cooperation by Canada and China on these subjects would affect trade outcomes over the longer term. Equally important, it would allow both sides to proceed with negotiations while remaining faithful to their overriding domestic political objectives and imperatives. Further delay in starting negotiations raises the risk that the joint interest of both parties in proceeding will be hijacked by extraneous factors, and the window of opportunity will close. Political will and creative and flexible negotiation mandates are needed on both sides, allowing the two countries to find a way to meet their respective negotiating objectives. Each needs to accept a slightly different package in design and wording, recognizing the political requirements and dynamics they each face, while finding the diplomatic common ground that will allow them to proceed