NAFTA Renegotiations – Round Two Underway

The next round of NAFTA renegotiations is underway in Mexico, and will conclude September 5 before heading to Canada for round 3. A sampling of some of the views of this latest phase:

Fraser Institute: Possible Scenarios and their Implications for Canada

For the Canadian government, a number of negotiating objectives pose political challenges. Most notably, the US goal of unrestricted access to Canada’s domestic agricultural markets represents a direct threat to Canada’s dairy (and other) supply management programs. The US demand for Canada to allow entry of US firms in all sectors would require that Canada eliminate foreign investment restrictions in banking, telecommunications, and a number of cultural industries, among others. The US call for Canada to adopt US intellectual property protections would require the Canadian government to strengthen legal protections enjoyed by foreign manufacturers of branded pharmaceuticals, while the US government’s desire for unrestricted cross-border flows of digital information will, over time, threaten Canadian broadcasting regulations that directly and indirectly promote the production and distribution of Canadian entertainment programming.

National Association of Manufacturing’s Linday Dempsey: More Regulatory Complexity Won’t Increase US Competitiveness.

On rules of origin, NAM Vice President of International Economic Affairs Linda Dempsey says, “It already costs many manufacturers millions of dollars to comply with the rules that we already have. The notion that we are going to improve American competitiveness and increase good-paying jobs by increasing complexity, increasing red tape and making it more it expensive to manufacture in the United States is really something of significant concern.” Dempsey adds that there are “much better ways to create more manufacturing jobs than the Trump Administration’s idea of establishing a specific NAFTA requirement that a portion of each product be made in the United States.”

The Rules of Origin are little known to companies and executives not involved in manufacturing in Mexico.  The United States has identified abuses of the Rules of Origin that have cost hundreds of thousands of U.S. Jobs.  It is an area of ‘sharp focus’ for the U.S. negotiating team to tighten application of the Rules of Origin. The other effort is to develop requirements that higher percentages of components being used in the manufacture of products benefiting from duty free be implemented.  The goal therein is to increase component manufacturing in North America as opposed to distant countries.

Dispute resolution: Canada says ‘hard no’ on changing NAFTA dispute resolution

Canada will oppose any effort to change the investor-state dispute resolution system in the North American Free Trade Agreement, imperiling the Trump administration’s efforts to fundamentally change the trilateral trade deal.

U.S. Trade Representative Robert Lighthizer has proposed allowing the three member countries, the U.S., Mexico, and Canada, to voluntarily opt in to the dispute resolution system known as ISDS. The system has international panels of arbiters adjudicate complaints between businesses and foreign countries. Lighthizer instead has suggested having the nation’s own courts hearing the disputes. The proposal has roiled the talks, which began in Washington this month.

It may be a moot issue however, as a source in the Canadian government with knowledge of the negotiations told the Washington Examiner that the government would refuse any changes to the existing system.

NAFTA Renegotiations Test Negotiating Skills of Three Countries

LA Times: Mexico signals tougher stance on NAFTA, may pull out of talks if Trump moves to scrap deal: 

On the eve of the second round of talks on the North American Free Trade Agreement, Mexican officials have publicly signaled a tougher negotiating stance in the face of renewed threats from President Trump to scrap the trade pact.  

In essence, Mexico appears to be calling Trump’s bluff, calculating that a NAFTA withdrawal would likely trigger a backlash in the United States — where agriculture and other key economic sectors benefit significantly from the accord.  

Asked if Mexico would remain in talks if Trump initiated the lengthy process to withdraw from NAFTA, the foreign secretary responded with an unequivocal “no.”

The Tecma Group of Companies of El Paso, Texas and San Diego, California, entered the Maquiladora Industry in 1986, years before NAFTA was created.  “We were successful prior to NAFTA and will continue to be successful in serving the needs of companies foreign to Mexico if NAFTA is scraped.  We are attentive to NAFTA renegotiations but not concerned for those companies that wish to benefit from lower wage costs and near-shore commerce.” said Alan Russell, founder and CEO of the Tecma Group of Companies.

In readings across the internet a probable theme is revealed that shows the probability of NAFTA renegotiations resulting in an improved agreement that will help all three country participants.   The reader is encouraged to review other articles on this subject in the Tecma Blog.