Canada’s Freeland says NAFTA talks center on autos

Washington (AFP) – US, Canadian and Mexican trade ministers currently are focusing on new content requirements for autos as they race the clock revamp their 24-year-old free trade pact, according to Canadian Foreign Minister Chrystia Freeland Wednesday.

Freeland told reporters she has met with auto industry and labor representatives to discuss the competing proposals, as well as talking with her counterparts from the North American Free Trade Agreement.

“We met yesterday and we also have been spending a lot of time with stakeholders, both labor and industry as the rules of origin conversation advances,” she said. 

“What’s really important for us is to talk through the emerging details with industry, with labor, to it be sure that we are coming up with something that is going to work.”

She has been in Washington since Monday for talks with US Trade Representative Robert Lighthizer and Mexican Economy Minister Ildefonso Guajardo.

The US has been pressing for an increased share of parts produced in high-wage countries in order for vehicles to enjoy duty free access throughout the three countries.

But Mexico has balked at that and instead proposed an increase in NAFTA content but without a wage-linked requirement and with a longer phase-in period of 10 years, according to press reports.

“This is definitely an issue that all three countries need to be working together on. The auto sector is important for all of us,” Freeland said.

Trade officials have been meeting throughout the month to clear the way for a deal on a new NAFTA before the political and legislative calendars in the three countries derail the process.

And The Washington Post cites US officials saying May 18 is the cutoff for reaching a deal that President Donald Trump can submit to Congress in time for them to consider it before his trade negotiating authority expires.

Canadians will vote in provincial elections in June, while the Mexican presidential ballot is on July 1 and the US has midterm legislative elections in November.

Trump triggered the NAFTA renegotiation last year after labeling the trade agreement a “disaster” that has destroyed US jobs. He has repeatedly threatened to leave the pact if a satisfactory deal is not reached.

If the agreement is not finalized by May 18 he will have to decide whether to keep the current agreement until talks can resume next year, or try to submit a partial deal to Congress.

But Democratic legislators who sit on a key trade committee warned Trump not to try to strong arm Congress into quick approval.

“A new NAFTA should pass Congress based on its merits and not on the threat of withdrawing from the existing agreement,” Representatives Sander Levin of Michigan, and Ron Kind of Wisconsin, said in a letter to Trump on Tuesday.

Canada and Mexico also have balked at American demands to scrap a dispute resolution mechanism and implement a “sunset” clause that would require the pact be renewed every five years, but those issues will have to wait until the auto rules of origin are settled.