NAFTA, round four

As we head into round four of the North American Free Trade Agreement (NAFTA) renegotiation, there’s still no clear direction as to where these talks are going. Manufacturers and logistics/transportation companies are keeping a close eye, wary of any impact the renegotiation might have on their businesses.

In NAFTA Watch, an update from law firm Benesch, the authors note that the first round of talks merely resulted in “detailed conceptual presentations” and intial work on specific textual modifications.

Round two of the talks began on Sept. 1 and continued through Sept. 5 in Mexico. Round three was held in Ottawa, ON, Canada, on Sept. 23 to 27 and round four will take place in Washington later this month. 

U.S. negotiators “have proposed controversial audit rules related to the rules of origin requirements aimed at protecting the automobile industry.” The automotive industry is big and growing south of the border. 

Canada has its knickers in a knot over issues surrounding an aerospace dispute between Montreal-based Bombardier and U.S.-based Boeing. “Tensions mounted between the United States and Canada, when the U.S. imposed a significant tariff on passenger plane manufacturer, Bombardier, related to its top-end passenger planes after U.S.-based Boeing sued Bombardier in April 2017. Boeing alleged that Bombardier had engaged in unfair trade practices by selling its marquee jetliner in the U.S. at less than fair value, while benefitting from unfair government subsidies in Canada,” said Benesch’s NAFTA report.

Benesch reported that the “U.S. Department of Commerce has affirmed that Bombardier has taken massive illegal subsidies in violation of existing trade law. Prime Minister Trudeau has made it clear that he wants this dispute settled or Canada won’t continue to do business with Boeing.”

One of President Trump’s aims with respect to the automotive industry is to “end the U.S. trade deficit with Mexico by creating manufacturing jobs in the U.S.” and to “focus on the automobile industry and the rules of origin, which stipulate that at least 62% of the parts in a car in North America must come from one of the three NAFTA countries.” Commerce Secretary Wilbur Ross “has argued that the old rule is outdated because it doesn’t consider parts that include Bluetooth speakers, back-up cameras and other electronics. He argues that the percentage from the NAFTA nations needs to increase, although he has not stated to what threshold,” said Benesch.

While all parties involved in the NAFTA talks have expectations of wrapping up the renegotiations by the end of this year, the talks are likely to extend into 2018.

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