U.S. Seen Putting Off Key Demand On Autos As NAFTA Talks Intensify

Even as U.S. negotiators looked set to once again withhold proposals for one of the Trump administration’s most challenging issues, talks to update the North American Free Trade Agreement have got more intense.

Amid warnings from trade experts that time was quickly running out to seal a deal by the end of the year as planned, teams from the United States, Mexico and Canada kicked off the third of seven planned rounds of discussions in Ottawa.

to qualify for tax free status, strengthening of the rules of origin for autos was one key issue for the U.S.as that dictates how much of a vehicle’s components must originate from within North America.

Canada’s chief NAFTA negotiator said that he did not think the United States would provide more details during the Ottawa round and the American side did not mention a specific goal in the first two rounds.

“We’re not expecting that, no,” Steve Verheul told reporters, predicting the pace of the talks would nonetheless quicken.

Rules of origin will be discussed on Tuesday and Wednesday according to a schedule of the talks obtained by the media.

Citing trade deficits of $64 billion with Mexico and $11 billion with Canada, U.S. President Donald Trump wants more U.S. content in autos. Trump has threatened to walk away from the agreement and says that NAFTA is weighted against his country.

He felt it was too early for detailed rule of origin proposals given that U.S. officials were still talking to the domestic industry, said Flavio Volpe, president of the Canadian Automotive Parts Manufacturers’ Association, late on Friday.

“It’s fine for us if they take a little longer so we all understand what our interests are and we make the right deal. We don’t need an early deal,” he said.

His team would introduce the difficult provisions in Ottawa talks that are due to last for five days, said U.S. chief negotiator John Melle, ahead of the talks.

There have been complaints from the U.S. and Canadian trade unions that Mexico’s low wages give it a manufacturing advantage and hence cheap labor is another tricky issue at the negotiations.

The media reported quoting sources with knowledge of discussions that proposals on intellectual property and investment is also expected to be presented by the United States. Various dispute settlement mechanisms are also included among the other areas of disagreement between the parties.

Inclusion of a five-year sunset provision by Washington in the updated agreement has already been rejected by Canadian and Mexican officials, as well as U.S. businesses. The proposal only adds uncertainty to investment planning was the reason put forward by the opposing parties while they negated the proposal.

(Adapted from Reuters)

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Categories: Economy & Finance, Geopolitics, Strategy, Uncategorized

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