By on October 17, 2017

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As the fifth round of NAFTA talks come to a close, Mexico and Canada continue to reject the United States’ demands regarding automobiles, diary, dispute panels, government procurement and the sunset clause. Among the more recent automotive proposals kicking up dirt is the U.S.’s wish to include steel in NAFTA’s tracing list and increase the mandatory local content of every car built in North America. The attempt has annoyed foreign officials and left the industry fretting about increased production costs and complexity.

The increasingly tense nature of the talks has left many wondering if President Trump will make good on his earlier threat to leave NAFTA. However, plenty of analysts are of the mind that a deal will eventually be reached between the three countries.

“It’s a lot of bluster. They’ll come up with a tweak and declare victory,” said Mark Zandi, chief economist at Moody Analytics, in an interview with Bloomberg. “At the end of the day, Trump’s a businessman, and he’s got to be listening to business people who are telling him it’s a bad idea [to pull out].”

Officials leading trade renegotiations are completing this most recent round of talks this week, after Canada and Mexico rejected what they see as irreconcilable proposals from the United States. Most contentious was the U.S. auto proposal, which would see the current rules of origin for car parts raised from 62.5 percent to 85 percent over a number of years, with a 50-percent U.S. content requirement.

Despite significant setbacks, the nations have come together on a number of other items. However, many investors and business — especially those within the automotive industry — are making decisions knowing NAFTA could crumble. As of now, no real progress on the agreement’s auto issue has been made.

Mexico is expected to host the fifth session of trade talks in November.

[Image: NAFTA Secretariat]

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33 Comments on “Obligatory NAFTA Update: Mexico and Canada Reject U.S. Proposals as Talks Wrap Up...”


  • avatar
    VW4motion

    Make NAFTA great again.

  • avatar
    I_like_stuff

    Canada and Mexico seem to think that we need them more than they need us. That is a very foolish thing to think.

    • 0 avatar
      Lou_BC

      “Canada and Mexico seem to think that we need them more than they need us.”

      *Citations required*

    • 0 avatar
      islander800

      Uh, no we don’t. It sounds like you think America is indispensable for us. It’s not.

      But America under Trump is foolish to think we’re going to take this coercive crap lying down. Both Mexico and us, here in Canada, are quite willing to walk away from a horrible trade deal imposed by a bully. Hundreds of thousands of American jobs depend on NAFTA, most in states that got your “president” elected. They will discover that, gee, NAFTA wasn’t so bad after all. But I expect they’ll still worship the pussy-grabber-in-chief, even as they lose their jobs.

      What about us? We’ll survive. Canada just entered a free trade deal with the EU, a market bigger than America. We’re also still in the game for TPP and we’re increasing our trade with China. America? Who’d want to enter into an agreement with a zenophobic entity that has just shown on the international scene (the Iran nuclear deal) that any agreement signed with them isn’t worth the paper it’s written on?

      I’m sorry, but until sanity returns to Washington and the White House, America is an international pariah. I don’t think average Americans appreciate the depth of the antipathy the rest of the world, including your late, great allies, have towards your country today. Don’t be surprised when the rest of the world, (Mexico and Canada now in particular) tells it to go pound dirt.

      We don’t need you, and God knows, we don’t want you the way your leadership has recently gone into meltdown. You soiled your bed by electing the idiot, now you can live in it all by your lonesome.

    • 0 avatar
      Big Al from Oz

      I like stuff,
      I do think you are a little deluded.

      If NAFTA was squashed and all parties walked away the US would actually lose out.

      Canada would be roughly were it is now. Mexico’s position would improve. The US will slide.

      I don’t know how some of you can’t see the forest through the trees.

      • 0 avatar
        deanst

        While trump may be a “f***ing moron”, the U.S. is Canada’s biggest trading partner, and any change in that relationship would hurt Canada – at least in the short term. As seen in the bombardier / air bus deal, trump can bully his way into getting what he wants – but it’s not as if prior presidents didn’t do the same when it suits their purposes.

        • 0 avatar
          Lou_BC

          @deanst – it is true that alterations in trade would hurt Canada as well as the USA.
          My province is heavily dependent upon lumber exports. Traditionally any downturn in the USA has hurt BC. The 2008 housing collapse had minimal effect on the BC forest industry because of US lumber trade wars, we have found other trading partners. There are plans in the works to build a pipeline from Alberta through BC to Prince Rupert to ship crude oil to Asia.

        • 0 avatar

          “As seen in the bombardier / air bus deal, trump can bully his way into getting what he wants”

          Ahh, how do you see that? Instead of actually blocking it and supporting Boeing in its attempts to stop Bombardier from becoming the next Airbus, it just encouraged a deal where Bombardier’s (arguably very good) product literally became the next Airbus.

          Yes, Alabama got some token additional jobs out of the deal, but make no mistake: the winners here were Airbus (and Delta, who hates Boeing).

          • 0 avatar
            islander800

            And Bombardier won. It won because it was able to seamlessly partner up with Airbus, in response to Trump’s isolationism, thanks in large part to the just-implemented Canada-EU free trade agreement.

            How’ that for irony?

    • 0 avatar
      Big Al from Oz

      I like stuff,
      I do believe you don’t have the capacity to comprehend the more complex issue in the world.

      You seem to approach a problem simplistically, then make a generalisation to suit the outcome matching your ill researched problem.

      The US will lose out financially, this will impact your standard of living, not only more expensive motor vehicles and other products, including agriculture, but a loss of exports, that will find no other market. Another problem facing the US over NAFTA is the WTO.

      I do recall an article earlier this year with Trump crying foul over Canadian milk sold in the US cheaper than the US milk can be produced. But Trump didn’t make mention that the Canadian’s milk industry is unregulated and the US isn’t. In other words US milk is socialised, guaranteeing farmer X amount of production irrespective of supply and demand. Or lumber. The Canadians have a far more efficient and cheaper model (the method in which forested land is managed). Not one Canadian piece of lumber is subsidised, like Canadian milk.

      Most markets that the US can enter into already have FTAs. The US will not find a market to enter as Princess Trumps wants where the US always wins.

      That isn’t how the cookie crumbles. The US needs to make an attractive proposition for another nation to buy into the US, whether exports and/or political will. The US isn’t in the same position as it was 40, 50 and 60 years ago. It can’t dictate terms, as there are plenty of other markets to buy and sell to.

      US trade is failing under Trump.

  • avatar
    I_like_stuff

    ““It’s a lot of bluster. They’ll come up with a tweak and declare victory,” said Mark Zandi, chief economist at Moody Analytics, in an interview with Bloomberg. “At the end of the day, Trump’s a businessman, and he’s got to be listening to business people who are telling him it’s a bad idea [to pull out].”

    LOL. This is the same Mark Zandi who swore up and down in 2007 that there was no housing crash coming. How this guy still has a job is one of life’s great mysteries. Second, remember how EVERYONE knew that Trump would never pull out of Paris because..well….he just won’t. Yeah how’d that turn out for you Mark?

    • 0 avatar
      Astigmatism

      Um, I don’t know who you were reading, but it was known pretty early on that Trump had every intention of pulling out of the Paris Accords as a sop to his base.

      That said, I _do_ remember someone in the run-up to the crash starting a mortgage company and saying “real estate is good all over,” “the real estate market is going to be very strong for a long time to come,” “I’ve been hearing about this bubble for so many years … but I haven’t seen it,” and “this boom is going to continue.”

  • avatar
    golden2husky

    All I expect is higher prices for the consumer. Case in point – I used to buy Canadian cedar shingles for $96 a box. Need a few more squares for the new project. Now they are $132 a box thanks to Trump’s import tax on wood products from north of the border. Get used to it. Between stuff like this and the loss of writing off property tax, a lot of people are going to see their standard of living decline, including me.

    • 0 avatar
      bullnuke

      As if things like shingle prices didn’t change in the past due to whatever. Life goes on. Nothing really changes.

      • 0 avatar
        Big Al from Oz

        bullnuke,
        gloldenhusky is correct. The trade between the NAFTA countries will revert to the WTO. Once this occurs US goods will be taxed entering Canada and Mexico.

      • 0 avatar
        JimZ

        this is the “Internet person” in a nutshell. “Prices changed in the past due to whatever” is somehow supposed to be a cogent argument.

        is it really that hard for people to admit when they don’t know something?

        • 0 avatar
          sgtjmack

          Well, here is what I know. Before MADE A, we had a pretty good trade position. When NAFTA was instated, the U.S. did not benefit as it was proposed. A lot of jobs were easily moved to Mexico, easier than before the agreement. It also became easier and cheaper for goods to pass through the U.S. to Canada, at the expense of the U.S.

          Did some produce become a little less expensive? Yes, but the prices also fell on the export side, so farmers suffered, as did wood products and a few other expired items that I don’t have time to add in right now.

          The other issue is the fact that transport companies and drivers lost out on being able to move the goods once they entered the interior, and more accidents happened between transporters from Mexico/Central America and U.S. drivers since their driving standards and vehicle inspection standards are lower than those here in the States and Canada.

          • 0 avatar
            Big Al from Oz

            sgtjmack,
            You seem to forget prior to NAFTA the world was different, financially and economically.

            There are many more countries that are competitive compared to the Olden Days of Yore you speak of.

            Back in the Olden Day you mention the US represented a much larger chunk of the World’s economy. It has shrunk by 40-50% in terms of it’s size. There are many more richer and competitive countries out there. And contrary to popular belief the US didn’t create all these countries as they represent more money than the US could turnover in a few centuries.

            The US now is facing a World as it would of been without two World Wars. That gave the US a period of 50 years or so with little or no competition in it’s influence.

            Compete, take risks and build a new America, the old America doesn’t exist, like the old UK or even old Australia.

          • 0 avatar
            Lou_BC

            @sgtjmack – I’ll just address the “wood” aspect of your comment. Lumber has always been an issue between Canada and the USA EVEN pre-NAFTA. I recall disputes going back to 1982. The USA industry has always accused Canada of subsidizing its forest industry. Again those complaints existed pre-NAFTA.
            Most of our lumber is on crown (public) land which changes how it is managed. Our system is more efficient since it takes into consideration timber access for large and small companies. We tend to guarantee wood supply through longer term contracts because companies aren’t going to invest billions of dollars into infrastructure without a consistent return on investment.

  • avatar
    ClutchCarGo

    “At the end of the day, Trump’s a businessman, and he’s got to be listening to business people who are telling him it’s a bad idea [to pull out].”

    Nearly everyone in his administration told him to certify the Iran nuke deal but he refused to do that, too. He makes these decisions based on personal interests, not the national interests. He wants to blow things up just to prove that he’s in charge.

    • 0 avatar
      sgtjmack

      So you think that because Trump doesn’t want to allow a country that wants to obliterate the U.S.A as well as other “western countries”, to be able to obtain nuclear weapons is a bad thing? Just because he certified it before, but now, after more research has been performed and Iran is not honoring their part of the agreement, has decided it is a bad thing to continue to allow it to move forward, doesn’t mean he is acting on “personal inrerests,” but actually IS putting the Nations security first.

      • 0 avatar
        Big Al from Oz

        sgtjmack,
        Iran doesn’t want to obliterate the US the same as the US wants to obliterate Iran.

        What are the tension regarding Iran about? What are the drivers for the Iranian situation? What is the reach of Iranian missiles?

        Is it more to do with the protection of Israel and the Arabian Peninsula as well?

        Is it also the Iranians supporting elements that oppose our values?

        Or is it Shiites versus Sunnis?

        Is it about oil?

        You just can’t make a simplistic comment, without any thought. As many of the issues confronting us about Iran are regional issues.

        Are you one of those who believe, like in Batman or Superman there is some sort of villain out to conquer the US?

        Because most every Western nation supports the nuclear issue with the US against Iran, so why are they not a target?

        Things are not as they appear. Maybe we don’t want Iran to become a regional power in the Middle East because their values don’t marry to what we in the West don’t want.

        • 0 avatar
          Big Al from Oz

          Sorry the first sentence should read;

          “Iran doesn’t want to obliterate the US the same as the US doesn’t want to obliterate Iran.

          We are trying to avoid this.

      • 0 avatar
        ClutchCarGo

        Where did he get the additional “research”? Mattis and Tillerson both recommended certification, did they not see the additional research? Why do none of the other parties to the agreement see that Iran is not honoring their part of the agreement? Europe is even more at risk from Iran since they are closer.

        Trump is angry at having to certify compliance with an agreement that he campaigned against hard, regardless of whether compliance is there. Part of his refusal to certify is a demand that he not be required to certify it anymore. That’s personal.

  • avatar
    sgtjmack

    I’m actually glad that it is taking a long time and several meetings to make the changes to NAFTA. This is not a simple agreement, and needs to be treated accordingly. There are too many tentacles involved in the three countries and the trade agreement. If it were taken care of and finalized in a few weeks and one or two meetings without some people getting upset, and having it rammed down the citizens throats, then I would question all of it. Oh, wait, that’s pretty much how we got the current agreement, and it wasn’t in the U.S.’s best interest.

    When complex issues are at stake, there needs to be time taken to iron out the wrinkles on all sides.

    Maybe this time it will be changed so that we actually benefit a lot more than we are under the current plan.

    • 0 avatar
      IHateCars

      “This is not a simple agreement, and needs to be treated accordingly….. If it were taken care of and finalized in a few weeks and one or two meetings without some people getting upset, and having it rammed down the citizens throats, then I would question all of it.”

      Kinda like health care….right?

    • 0 avatar
      Astigmatism

      “If it were taken care of and finalized in a few weeks and one or two meetings without some people getting upset, and having it rammed down the citizens throats, then I would question all of it. Oh, wait, that’s pretty much how we got the current agreement.”

      Literally, what are you talking about? NAFTA was negotiated for 14 months between 1991 and 1992. It was then debated by the House and the Senate for nearly a year, before being passed by bipartisan majorities in both houses and signed into law by the President in late 1993.

      Seriously, where do you people come up with alternate histories like this? It boggles the mind.


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