NAFTA talks continue as pork production grows

Gladys Abbott
September 24, 2017

As round three of NAFTA talks kick off this weekend, Rona Ambrose, member of Foreign Affairs Minister Chrystia Freeland's NAFTA Advisory Council, joins BNN to discuss why U.S. President Trump has made NAFTA talks a "political" move and why Canada should not fall into that trap.

Oversold? No, U.S. free trade agreements are working better than expected.

"If we don't fix the rules of origin, negotiations on the rest of the agreement will fail to meaningfully shift the [U.S.] trade imbalance", Mr. Ross wrote in a recent opinion piece in The Washington Post.

The source says the USA had been expected to present its text on labour standards before the third round of talks, which begin Saturday in Ottawa, but that has not yet happened. As a result, the renegotiation of the North American Free Trade Agreement (NAFTA) has the potential to significantly impact the economy of Arizona and the SEAGO Region for better or worse. That is why we have a NAFTA net trade deficit in goods of $70 billion.

David MacNaughton, Canada's ambassador to the USA, acknowledged Friday that the clock is ticking on the talks overall - and that negotiators won't be able to take a passive approach if they want the best deal possible.

Céline Bak, a senior fellow at the Centre for International Governance Innovation's Global Economy Program, said she expects to see progress on key issues during the third round of talks in Ottawa, such as rules of origin and the integration of new labour and environment standards into the deal.

These data debunk the claim that USA content in the form of parts is so high that we shouldn't worry about headline gross-deficit figures.

Political distractions caused by the US mid-term elections and the Mexican presidential vote next year could freeze the prolonged North American Free Trade Agreement (NAFTA) talks, said Tomasz Swiecki, a trade expert at the local University of British Columbia (UBC). "Tightening NAFTA's rules of origin on automobiles either by raising the NAFTA-wide threshold or by introducing a USA -specific content requirement, wouldn't bring the production of these components back onshore", Carlos Gomes, a senior economist at Scotiabank, wrote in a September 21 report.

And trade experts on both sides of the border are warning that it could backfire.

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That provision allowed North American supply chains to complement originating input purchases, support manufacturing operations in all three countries, and continue using NAFTA despite the worldwide sourcing options available, AAFA feels.

That could drop, the paper acknowledges, with the rapidly increasing computerization of cars and trucks since the electronic components are primarily produced in China, Japan and Germany.

Reports in the USA suggest the Americans are looking at raising the North American content to more than 70 per cent and adding a specific US content requirement of anywhere from 35 to 50 per cent.

This problem is particularly troubling because the previous USA share of the content found in imports from Canada and Mexico is largely being absorbed by non-NAFTA trading partners, not by Canada and Mexico themselves. "We're running very quickly somewhere".

Unifor president Jerry Dias, whose union represents Canadian autoworkers, supports hiking the North American content requirement, but warns it can't be done in isolation.

She said unlike the Americans, Canada won't be angling to get more of everything, but rather want to see increased trade liberalization across North America.

At the same time, automotive value added content from non-NAFTA countries in Mexican auto imports rose to 29.5 percent from 13.2 percent.

Canadian auto workers are supportive of higher North American content but they also want Ottawa to press for tougher labour laws in NAFTA to push up wages in Mexico.

- With files from Armina Ligaya in Toronto and Ian Bickis in Banff, Alta.

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