NAFTA Renegotiations Begin, Automakers Worried Over Rules of Origin

nafta renegotiations begin automakers worried over rules of origin

The first round of the North American Free Trade Agreement renegotiations begins on Wednesday. U.S. President Donald Trump, Mexican President Enrique Peña Nieto, and Canadian Prime Minister Justin Trudeau have planned to meet in Washington, D.C. on August 16th and stay through the 20th to discuss trade policy. Afterward, NAFTA debates will be led by U.S. Trade Representative Robert Lighthizer, Canadian Foreign Minister Chrystia Freeland, and Mexican Economy Minister Ildefonso Guajardo.

While this all began as a Trump campaign promise to renegotiate a better deal for the United States (or abandon the trade agreement entirely), it has evolved over the last six months into an opportunity to modernize NAFTA policies. There’s no firm deadline for the three countries to reach an agreement, but Mexico is pushing for the process to wrap up before its presidential campaign begins in earnest in February.

The United States has said its primary goal for the talks is shrinking its $64 billion trade deficit with Mexico, as well as its $11 billion deficit with Canada. It also wants to strengthen NAFTA’s rules of origin, eliminate Chapter 19 trade dispute mechanisms, and stop currency manipulation among trading partners — even those that apply less to North American partners.

Automakers and suppliers have been clear they want ensure fluid movement of product between countries and are opposed to tightening the rules of origin, especially as they relate to vehicle parts.

“In terms of the rules of origin, the overall goal is to address concerns about doing more to incentivize and create more manufacturing and more manufacturing jobs in the United States,” an unnamed U.S. official told Reuters in an interview. “I think each country expects benefits for itself from those rules of origin, and I think that’s what you’re seeing reflected in our objective statement.”

U.S. Senator John McCain publicly cautioned the Trump administration not to force “new barriers that could harm our ability to trade with our closest neighbors.”

“I urge the administration to pursue an outcome that does not pick winners or losers, but further promotes the free flow of trade with Mexico and Canada that has and will continue to boost our economy,” said McCain.

Canada’s primary sticking point is the elimination of Chapter 19. Freeland has even gone so far as to suggest her country could walk away from the talks if the U.S. insisted on eliminating preexisting mechanisms to resolve trade disputes between the three NAFTA participants.

Speaking on Tuesday, prior to a meeting with Guajardo at the Canadian embassy in Washington, Freeland said she looked forward to a “productive, constructive conversation.” Meanwhile, Guajardo said he wanted to exercise caution.

“I have always said a negotiator cannot be an optimist. He has to be a realist with a positive approach,” he told reporters.

[Image: NAFTA Secretariat]

Join the conversation
5 of 19 comments
  • Ect Ect on Aug 16, 2017

    According to the USTR, "The U.S. goods and services trade surplus with Canada was $12.5 billion in 2016". The US surplus in services was (as per USTR) $24.6 billion, which suggests a deficit in trade in goods alone of $12.1 billion. People manipulate these numbers to suit their agenda, but the aggregate of goods and services is the truest approach, especially as services have become a more and more important component of US foreign trade.

    • Nemosdad Nemosdad on Aug 17, 2017

      ect, I missed your response when replying above. I'll use them as part of my discovery. Thanks, Scott

  • FOG FOG on Aug 17, 2017

    Are all Matt's articles void of substance and information? This is the second one I have come across today that was thinly veiled criticism and dislike without any merit.

    • See 1 previous
    • 28-Cars-Later 28-Cars-Later on Aug 18, 2017

      I think this one is pretty informative and factual, others may be hit and miss.

  • Syke Thanks, somehow I missed that.
  • 285exp I am quite sure that it is a complete coincidence that they have announced a $7k price increase the same week that the current administration has passed legislation extending the $7k tax credit that was set to expire. Yep, not at all related.
  • Syke Is it possible to switch the pure EV drive on and off? Given the wonderful throttle response of an EV, I could see the desirability of this for a serious off-roader. Run straight ICE to get to your off-roading site, switch over the EV drive during the off-road section, then back to ICE for the road trip back home.
  • ToolGuy Historical Perspective Moment:• First-gen Bronco debuted in MY1966• OJ Simpson Bronco chase was in 1994• 1966 to 1994 = 28 years• 1994 to now = 28 yearsFeel old yet?
  • Ronnie Schreiber From where is all that electricity needed to power an EV transportation system going to come? Ironically, the only EV evangelist that I know of who even mentions the fragile nature of our electrical grid is Elon Musk. None of the politicians pushing EVs go anywhere near it, well, unless they are advocating for unreliable renewables like wind and solar.