#NorthAmericanFreeTradeAgreement

With NAFTA negotiations finally progressing a bit, now would be the perfect time for something to bring up another potential hurdle and ruffle everyone’s feathers. This time, the prospective cataclysm stems from Mexico, and has manifested itself as one man — presidential frontrunner Andres Manuel Lopez Obrador, known colloquially as “AMLO.”

Business interests and NAFTA advocates are fearful the leftist candidate could chuck a wrench into the trade policy by adopting a hardline stance opposing the White House’s plan to redefine the agreement to favor the United States. Lopez Obrador is a long-time proponent of social programs that help vulnerable members of society. However, many criticize him for being a populist with socialist ideals that do not serve the financial well-being of the country at large.

While this is debatable, winning Mexico’s July 1st election could see him push back hard against U.S. trade proposals, stalling progress.

After what could be called some of the least productive negotiations in North American history, some progress is finally being made on the North American Free Trade Agreement. We know, with all of the negative rhetoric being slung from all sides, it sounds impossible. However, all three trading partners are beginning to bend on some of the issues that have proven the trickiest to navigate.

Among them is the faintest glimmer of hope that the automotive content requirements pushed by the United States might be adopted by the other nations, albeit in a modified form.

Still, progress is progress, and it only took about six months to get to a point where some meaningful headway could finally be made. Absolutely incredible. Let’s give these officials a huge round of applause for really getting in there, taking care of business, and not wasting a bunch of time.

With everyone weighing in on the ultimate fate of the North American Free Trade Agreement, it almost seems as if we’re cataloging their bets to see just how right or wrong they’ll be in the negotiatory aftermath. Considering there has been such a limited amount of progress on the trade talks, there honestly isn’t much else to do.

Suggesting that NAFTA is “is going to blow up in 2018,” Jerry Dias, president of the Canadian union Unifor, has planted his flag on the side of a total breakdown of the agreement. Unifor represents 23,500 Detroit Three auto workers living north of the border, plus some 16,000 working in the supply chain.

As a union leader, Dias is prone to hyperbolic statements. However, his insight into the situation runs a little deeper than most.

In case you haven’t kept up with the coverage on the renegotiation of the North American Free Trade Agreement, things haven’t gone well. Despite wrapping the latest round of talks in Washington on Friday, negotiators have made no clear progress on updating the trade deal. Considering a new deal is supposed to be finalized by the end of March, it’s beginning to look as if the NAFTA revamp might be doomed.

The biggest issue crippling the talks continues to be regional-content requirements for cars to qualify for NAFTA benefits. Both Mexico and Canada have described the U.S. content proposals as “unworkable.”

The automotive industry is wary of any changes that might be made in regard to the North American Free Trade Agreement. Fortunately for them, little progress has been made during the last few months of negotiations. But that doesn’t create an assurance that changes aren’t still en route. So, manufacturers and suppliers have banded together via various trade groups to voice their opinion on how to best handle NAFTA.

Meanwhile, the Trump administration has attempted to make itself appear friendly to the automotive business. Continuing these efforts, Vice President Mike Pence has met with General Motors CEO Mary Barra, Fiat Chrysler’s Sergio Marchionne, Ford North America President Joe Hinrichs, and a handful of other top-tier auto executives.

A bipartisan group of over 70 members of the U.S. House of Representatives has asked the Trump administration to reconsider its North American Free Trade Agreement proposal on auto parts rules of origin. Seen as a sunset clause by Canada and Mexico that tweaks international agreements to lower the United States’ trade deficit, the rule has also received some serious blowback from domestic automakers. They’ve even used trade groups to craft awareness campaigns and reach out to congress, a decision that appears to be working.

Currently, NAFTA mandates at least 62.5 percent of the materials used in a car or light truck be sourced from North America in order to avoid tariffs. The Trump administration’s proposal would up that requirement to 85 percent, with 50 percent of the total being from the United States.

Despite President Trump giving Toyota significant praise for its continued investment in the United States last week, the success of the automaker’s production plans hinge on the continuation of NAFTA — something the Commander in Chief has been vehemently opposed to since his well-before his inauguration.

Toyota and Mazda’s $1.6 billion factory is anticipated to yield 150,000 Corollas annually and free-up assembly facilities in Mexico that would build the Tacoma pickup. However, if the North American Free Trade Agreement is dissolved, anything produced south-of-the-boarder could be subjected to the chicken tax. Were that to happen, Toyota would be placed into quite a predicament and faced with high import taxes on any trucks it had hoped to ship to the U.S.

An “army” of lobbyists has come to Capitol Hill. American automakers are “speaking with a unified voice” in pursuit of a single goal. The business media and papers of record are pushing a message that hasn’t been this identical since this time last year, when they were competing with each other to see who could most strongly support a certain inevitable presidency.

What’s got everybody so upset?

Domestic automakers and suppliers have already expressed concerns that leaving the North American Free Trade Agreement could be detrimental to the industry. Numerous automotive trade groups have claimed that losing NAFTA would result in less efficient and more costly ways of doing business.

Hoping to steer Donald Trump away from the idea of abandoning the three-country accord, manufacturers, parts suppliers, and dealers have come together to form the “Driving American Jobs” coalition. The group’s primary goal is to prove that NAFTA has been beneficial to the participating countries, especially the United States. It also makes the claim that withdrawing from NAFTA would re-establish trade barriers, hurt the U.S. economy and cost jobs.

“We need you to tell your elected officials that you don’t change the game in the middle of a comeback. We’re winning with NAFTA,” urges the group’s website.

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.

Automotive trade groups have issued warnings about the scrapping of the North American Free Trade Agreement all year. In January, the Center for Automotive Research claimed killing NAFTA could result in the elimination of at least 31,000 auto jobs within the United States. This week, a new study sponsored by the Motor Equipment Manufacturers Association upped that estimation to around 50,000.

With early negotiations not going particularly well at the moment, the new tally serves as a potential warning. If NAFTA is abandoned, North American countries would all likely revert to rules dictated by the World Trade Organization, resulting in higher tariffs from all sides.

While 50,000 fewer jobs is the upper echelon of what could be expected, a few things have to go wrong for it to reach that point. First, Mexico and Canada would have to revert to pre-NAFTA tariff levels — which were comparably higher than the United States. If so, manufacturers would almost assuredly begin sourcing more parts from the same countries where the vehicles are assembled, and gradually move production to lower-cost regions like China.

President Donald Trump entered into office threatening to abandon the North American Free Trade Agreement if the United States was not given a better deal immediately. But, after negotiations began, it looked as if his ultimatum would be unnecessary.

Now, U.S. officials involved in NAFTA negotiations are being accused of making proposals on issues Mexico and Canada have said they would never agree to. Are these bold negotiation tactics being used to place the U.S. in a better position for future issues, or are trade arbitrators intentionally trying to sabotage talks so Trump can make good on his promise to leave the agreement?

When Donald Trump took office, one of his first presidential acts was to rally domestic automakers for a series of meetings and promise to remove regulatory barriers. As the administration was a self-described ally to the car industry, the claim appeared genuine. There was some tough talk about foreign involvement but, for the most part, Trump appeared to be in domestic manufacturers’ corner.

As focus shifted toward the renegotiation of the North American Free Trade Agreement, automakers had one request: to not impede cross-border trade. It was their primary concern leading up to this week’s talks.

Two days later and the issue has become a major sticking point; placing auto industry groups from Canada, Mexico, and the United States at odds with the current administration. As NAFTA talks began in Washington, D.C., automaker and parts groups from all three countries began outright pleading with U.S. negotiators to abandon their push for tighter rules of origin. Now they are formally opposing it.

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.

Mexico and Canada are finally in agreement that NAFTA could use an update, not that the Trump administration gave them much of an opportunity to refuse renegotiations. However, after taking a critical look at the two-decade old agreement, representatives from all three nations have reached the consensus that it’s time for a change.

At Wednesday’s CAR Management Briefing Seminars, Colin Bird, minister-counselor for trade and economic policy at the Canadian Embassy, and Francisco Sandoval-Saqui, a Mexican trade official for his country’s Ministry of the Economy, laid out their country’s agendas for the NAFTA trade talks slated to begin in Washington, DC on August 16th.

Both countries are eager to make cross-border trade more fluid without handing an unfair advantage over to the United States. President Trump has previously accused NAFTA of being “the worst trade deal maybe ever signed anywhere, but certainly ever signed in this country,” and immediately moved to dismantle it upon taking office. While his stance has softened over the last few months and the reins have been handed over to Robert Lighthizer, Trump has remained bullish on the issue — claiming domestic automakers are giving away U.S. jobs and income to Canada and Mexico.