Obligatory NAFTA Update: Mexico and Canada Reject U.S. Proposals as Talks Wrap Up
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]
A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.
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“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.
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.