By on May 17, 2018

If you forgot today was the deadline for finalizing North American Free Trade negotiations, don’t worry, so did practically everyone else. In fact, the whole affair is starting to feel like that old car that’s been sitting in your friend’s yard for far too long. He keeps telling you he’s going to fix it up and make it better than new. “This is the summer,” he says. But you know he’s just going to keep mowing around it while it continues to rust and collect mice, so you’ve tried to push it out of your mind.

Like the restoration, the entire concept of a deadline for the trade deal is rather arbitrary at this point. NAFTA’s initial target date for an agreement between the three countries was March 31st, roughly one year after negotiations began. The May 17th deadline was claimed by U.S. Speaker of the House Paul Ryan, who said Congress had to be notified under the Trade Promotion Authority statute.

“We need to receive the notice of intent to sign soon in order to pass it this year,” explained Ryan’s office. “This is not a statutory deadline, but a timeline and calendar deadline.”

Basically, Congress wants to influence the president and NAFTA negotiators to conclude talks swiftly and reach an agreement before midterm elections. But Mexican officials warned everyone not to get their hopes up. “The possibility of having the entire negotiation done by Thursday isn’t easy, we don’t think it will happen by Thursday,” said Mexican Economy Minister Ildefonso Guajardo earlier this week. 

U.S. Trade Representative Robert Lighthizer followed up by telling lawmakers in a meeting on Wednesday that he didn’t believe any agreement could be reached by then or even in the near future, Bloomberg reports“He was not optimistic this was all going to get wrapped up in the next 24 hours, to be sure,” said Representative Ron Kind of (D-Wisconsin). “He felt there was some back-sliding going on with Mexico, and Canada, to a certain extent.”

One of the biggest points of contention between the three nations is rules of origin for automakers, which dictate how much of a vehicle’s individual components need to stem from North American sources to be able to be traded without tariffs. The United States revised its initial proposed increase (from 62.5 to 85 percent of a vehicle’s overall content) after noticing how poorly it went over. The new proposal applies a 75 percent requirement on major components and allows for lesser parts to maintain the existing NAFTA mandates.

Mexico hates the idea. Canada is also not particularly enthusiastic, but at least expressed a willingness to entertain the new proposal. Like the United States, Canada seems interested in passing some kind of agreement before the Mexican presidential election in July. While the same should go for the current administration in Mexico, the country has begun dragging its feet on trade talks over the last few months, especially after the U.S. said it would have to pay its workers higher wages. Very little progress has been made in 2018, and the Mexican auto manufacturing industry has started voicing serious opposition to the content rules of origin proposed by the United States.

U.S. and Canadian auto industry representatives seem similarly concerned, though appear less interested in putting up a fight. Could the revised content mandate harm the car industry? According to a recent study from by the Michigan-based Center for Automotive Research, yes. It speculated that higher targets could force some U.S. automotive and parts manufacturing to eventually move to lower-cost regions outside North America. That’s a bummer, considering Trump said the whole point of this new deal was about securing American jobs.

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21 Comments on “Bet You Forgot Today Was the NAFTA Deadline...”


  • avatar
    I_like_stuff

    NAFTA’s results:

    Trade deficit with Mexico:

    1991: $2.1B Surplus
    1992: $5.3B Surplus
    1993: $1.6B Surplus

    Then NAFTA gets implemented….

    1994: $1.3B Surplus
    1995: $15.8B Deficit
    1996: $17.5B Deficit

    2000: $24.5B Deficit
    2005: $49.8B Deficit
    2010: $66.3B Deficit
    2017: $71.0B Deficit

    But if we get rid of NAFTA somehow the US economy will implode….or something.

    • 0 avatar
      vehic1

      And yet – the whole economy is doing SO well, and it’s ALL because of trump? Day One, the Stable Genius fixed the world, as he promised – so therefore, No Problemo, right?

      • 0 avatar
        I_like_stuff

        The economy is doing exceptionally well. It would do even better without sending $70B to Mexico every year.

        • 0 avatar
          SkiDad

          Trade is not a zero sum game.

          Total US exports to Mexico
          in 1994: $50bn
          in 2017: $240bn

          That’s almost a 400% increase in exports at a time when the CPI only went up 65%.

          Lose NAFTA and that economic growth and the jobs that support it would be much smaller.

  • avatar
    Charliej

    The economy will not implode. Things will just get more expensive. And Americans will have to do without a few things that they like. Life will become a little more difficult. After voting for Trump you all deserve shat happens to you.

    • 0 avatar
      I_like_stuff

      If $70B a year is good. Is $700B 10X better? Is $7T 100 times better. How about we stop making anything and just import everything. Think how cheap everything will be then.

      Trump is such a poopy head. The nerve of that guy wanting to bring jobs to American workers. We need more enlightened thinking like Clinton, Obama and both Bushes who combined eliminated 6 million manufacturing jobs in the US, thanks to NAFTA and WTO.

      • 0 avatar
        DearS

        We are producing more than ever with fewer people. We are twice as efficient at 20 years ago. At least that is the leading narrative, but some data does suggest other wise.

  • avatar
    sirwired

    Huh; you mean that re-negotiating large international trade deals is difficult, time-consuming, and can’t be done just by making crude insults and boasting of your negotiation prowess on Twitter?

    I never woulda’ guessed!

  • avatar
    Hummer

    Good, hopefully this means NAFTA is thrown in the trash where it should have been from the start. Finally we have a working government.

    • 0 avatar
      I_like_stuff

      Finally we have a working govt which puts American interests first. You know, kinda like how it’s supposed to work. Funny isn’t it how Canada and Mexico are trying to get the best deal for themselves and nobody says a thing. But if the US tries to get a good deal for itself it’s 24/7 teeth gnashing by the usual suspects in the media. How dare an American president do what’s in the interest of America? Doesn’t that troglodyte realize America’s president must always put the interest of foreigners first and foremost?

    • 0 avatar
      Lou_BC

      “Finally we have a working government.”

      Really?

      Citations required.

    • 0 avatar
      highdesertcat

      “hopefully this means NAFTA is thrown in the trash”

      NAFTA didn’t pan out the way it was supposed to *for the US*! As it turned out, our trading partners did not buy as much from the US as the US bought from them.

      That’s the disparity.

      Before it was implemented, there were economists who warned that the US would bear the brunt of the deficits because, as it was written, neither of the trading partners had an economy that could consume as many US products as the US economy imported from them.

      Our NAFTA partners took advantage of the US, and they knew it.

      They liked it. They loved it. And each passing year they wanted more of it.

      Then……, Trump. Not afraid to speak his mind and point out the error of the deal(s).

      Changes a’comin’ people. Lots more changes.

      Lead. Follow. Or get the hell out of the way.

      • 0 avatar
        Arthur Dailey

        Actually that narrative is quite untrue.

        The original Canada-US Free Trade Agreement was hotly contested in Canada. Mass demonstrations and petitions against it. 2 of the 3 major political parties opposed it. With Canada having greater manufacturing/transportation/labour costs than the USA due to a number of reasons, it was predicted that we would lose manufacturing and low skill jobs, control of our industries and through buy-outs, of our natural resources.

        However the drive for ‘free trade’ was driven by the US Government and large American corporations, anxious to break down Canada’s traditional tariff programs, in place since 1867.

        As predicted, many Canadian corporations were quickly ‘bought up’ by American multinationals, and often closed down. The rights to our natural resources were acquired by foreign corporations.

        Then Mexico entered into the equation. Again largely at the behest of large American multinational corporations. Entering into a ‘free trade’ agreement with a developing nation is and never was a good idea for those in the working class of the developed/1st world nation.

        It did however, again as predicted, result in many jobs moving to where labour, safety and environmental laws/costs were lowest.

        But then what is surprising about this? Karl Marx predicted it in the mid 19th century. Which is why he warned about corporations buying/controlling politicians and becoming more powerful than many governments.

        As to increased production efficiency over the past 20 years. That is also true. Robotics, automation, lean manufacturing techniques, etc have, as always, replaced labour with technology. That historically has always happened. As the Luddites understood.

  • avatar
    Zipster

    Is that a ’52?

  • avatar
    Zipster

    Is that a ’52?

  • avatar

    If Mexico makes so much money (resulting in US deficit) how they are so poor? The goal eventually is create middle class majority in Mexico. Having poor country on your border is not a good proposition. Romans, French and British learned that hard way. Every country is trying to screw US, even Japan. US intentionally signed bad deals to pull these countries out of poverty. Now Japan and EU are the richest countries in the world – it is time to review all those one-sided agreements.

  • avatar
    Sub-600

    NAFTA? H. Ross Perot, his voodoo stick, and his pie charts were right. The flying saucers at his daughter’s wedding? The jury is still out on that one.

  • avatar
    Sceptic

    One of the promises of NAFTA was to keep Mexicans in Mexico. And that failed miserably. Poor Mexican underclass flooded into the US in ever greater numbers.

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