Mexico readies for worst as 4th round of NAFTA talks open

Jerome Frank
October 13, 2017

Trump has maintained his threat to walk out on the fourth round of talks to update the North American Free Trade Agreement, even amid rising opposition at home to his hard-line stance.

Despite their common ground, however, Canada and Mexico are also at odds on some key issues.

"There's been huge investments in Canada, the USA and Mexico, that are long-term assets", said Don Walker, chief executive officer of Magna International Inc. a Canada-based parts maker with more than 25,000 employees in the U.S.

The process of renegotiating NAFTA has turned increasingly sour.

Canada and Mexico rejected the idea of a sunset clause after Commerce Secretary Wilbur Ross floated the proposal last month, saying it would create so much uncertainty for businesses that it could hurt long-term investment.

"It's going to continue as we figure out new rules, there is going to be some friction", he said on the sidelines of the World Bank-International Monetary Fund annual meetings in Washington.

Negotiations to overhaul the North American Free Trade Agreement (Nafta) seem headed for the rocks, analysts say, with United States proposals unpalatable to Mexico and Canada.

Business and farm groups say abandoning the 23-year-old pact would wreak economic havoc, disrupting cross-border manufacturing supply chains and slapping high tariffs on agricultural products. Overall trade between the three Nafta partners reached $1.1 trillion in 2016.

Trudeau told reporters in Washington DC that he agreed with the United States president that that the NAFTA trade deal needed to be revamped and that any new agreement needed to "give citizens opportunities to succeed".

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Some trade observers said it is hard to see how negotiators could reach an agreement given USA demands that many see as nonstarters.

With the clock ticking down towards Brexit day in 2019, British ministers are exploring the options if the world's fifth largest economy drops out of the European Union without a clear trade deal.

"NAFTA is not going anywhere". That looked unlikely to come before Friday, another official familiar with the talks said.

Trump, who has long criticised the agreement and almost withdrew from the pact earlier this year before instead pursuing renegotiation, said, "It's possible we won't be able to make a deal and it's possible that we will".

Negotiators were also set to cover the hard issue of government procurement on Thursday.

U.S. Chamber of Commerce CEO Thomas Donohue, speaking in Mexico City on Tuesday, said the rules of origin proposal would send more business overseas. Under the U.S. proposal, America would require more to be made in the country and less sourced from other members of the block.

The expected to propose substantially raising the regional requirement, from 62.5 percent now, and potentially add a U.S. -specific content requirement. "There are several poison pill proposals still on the table that could doom the entire deal".

"Instead of encouraging more US content, these provisions will lead to less USA content", Wilson said.

However, a study released on Thursday by the Motor Equipment Manufacturers Association, which represents US auto parts makers, showed the higher content requirements would lead to the loss of up to 24,000, as some companies would forgo NAFTA's tariff-free benefits and ship in more components from other countries.

Other reports by Guamnewswatch

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