US stance on auto industry sows more doubt about Nafta overhaul


The Trump Administration demanded Friday that US-made content represents half of the value of cars and trucks sold under the North American Free Trade Agreement, raising new doubts about a possible agreement to renew the pact.

Three sources of information on the US proposal for protectionism, which has set itself the goal of President Donald Trump to reduce the trade deficit with Mexico and curb the loss of jobs manufacturers in the United States.

The proposal was made during controversial discussions in Washington during the fourth of the seven rounds of negotiations for the revision of the treaty.

Mexican sources denounce it as "absurd", but Juan Carlos Baker, the Deputy Minister of Economy of Mexico, gave a courageous speech on the state of Nafta negotiations midway . "There is no doubt that there are difficult proposals," Baker told reporters at the Mexican embassy in Washington.

He said that Mexico would consider them all, although he said: "It is clear to us that there are certain things that are proposals that go against the objectives of the country ".

Trump, who claims that the original pact of 1994 was a disaster for the United States, threatens to move away from the agreement unless major changes are made

The gambit of the Washington auto industry came as a result of his request that Nafta also contain a so-called extinguishing clause. This could mean that any new agreement expires in five years, an idea that Canada and Mexico strongly oppose.

Although informed sources on the talks describe the mood as sour, Mexican and Canadian politicians say there is no question of leaving the table at the moment

The collapse of Nafta would wreak havoc across the North American economy, disrupting highly integrated manufacturing supply chains and agricultural exports, with abrupt tariffs that would replenish . Trade between the three countries has more than quadrupled since 1994 to more than $ 1.2 trillion a year.

Sources close to the talks said that Washington wanted to increase North American content requirements for trucks, automobiles and big engines to 85% against 62.5% over a period of several years. This adds to his insistence that 50% of the products used in vehicles are manufactured in the United States during the first year of a signed agreement.

The proposal also requires that steel, aluminum, copper, plastics, electronics and other parts originate from North America so that vehicles are eligible for Nafta duty-free status.

Trump has made it clear that he prefers bilateral trade agreements, and skeptics wonder whether US demands are part of an "American first" strategy to defeat the negotiations in progress

The US Chamber of Commerce listed the request for greater use of US-made products for vehicles among a number of "poison pills" proposals that it said would torpedo the talks.

According to the chamber, the proposal would cost jobs because automakers and parts suppliers would probably give up the benefits of Nafta and would simply pay the US 2.5% tariff for imported cars and many parts

Unifor, the union that represents most of the automotive workers in Canada, said the American proposals were deliberately unsustainable.

"Frankly, I think this is a US government intimidation maneuver," said Unifor President Jerry Dias in a statement



Source link