U.S. to demand higher American auto content in NAFTA talks, Ross warns

shockedcanadian

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Aug 6, 2012
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Title was taken from another article for which it is locked (need a newspaper subscription), but it is the general idea from which this article spawned.

Sometimes when you have a great deal but you choose to violate this deal (and are subsequently exposed for these tactics), as Canada has, you pay a steep price. As it were, Ross and Lighthizer are to be commended for this principled stance against Canada and Mexico. I have not made it a secret that I have reached out to their administration and feel extremely comfortable with the language and tactics of Canadian business practices.

As is the approach of this Trump administration, an approach I agree with due to the circumstances; if this isn't addressed satisfactorily, America will withdraw from NAFTA. My gut tells me of all the negotiating threats he has made, of this one he is at the very least considering, if not outright prepared to leave the agreement. It would not harm the American economy much at all, and would instantly generate more jobs in the U.S. I would recommend, and will personally share this with the Trump administration, that if he leaves NAFTA to immediately raise the foreign auto tariff from the current 2.5% to minimum 10%. This will deter any exporting of jobs for the purposes of cheap labour.

Now, as someone who has been a free market, free trade advocate for some time, I cant say I disagree with this approach. Why? It's simple, I can't speak for Mexico but I can say that Canada is violating both the spirit and the various Chapters of NAFTA, specially Chapters 10 and 11. This is placing American corporations and workers at a major disadvantage, as the "centralized government (see RCMP and their surrogates)" do as they please, when they please, without exposure or consequences (until now).

Furthermore, if anyone looks at this objectively, Canada does not have a domestic auto industry, it is simply cannibalizing U.S jobs via grants, PR campaigns (sometime even with the help of U.S politicians. Astounding really) and other means (bribes? operatives in the corporations?). How is America receiving any benefit from the export of hundreds of thousands of jobs to like minded economies? How many Canadian companies are employing Americans in a likewise manner?

I'm going to repeat. I don't hate my country as some have suggested. I believe in free markets, and more importantly free citizens. I've experienced neither and have far too much information about how covert police operate in Canada, much to the chagrin of those protecting their reputations over the Canadian economy.

So do what you must Mr. Ross and Mr. Lighthizer. Canada, and in particular Ontario and Toronto, will feel the brunt of this, the cost of not innovating or playing by the rules, but exploitation of our closest ally and only defense against foreign invaders. Poetic justice I suppose. As I told an RCMP intake worker and former government employee when I first protested Canadian tactics against American corporations (and abuses against myself), "I hope it's worth it"...

Freeland touts 'made in Canada' NAFTA approach, meet with advisory panel

OTTAWA -- The Canadian automotive industry is anxiously waiting to see if the next round of NAFTA negotiations will provide some clarity on American demands that vehicles must have "substantial" U.S. content to qualify for duty-free movement within North America.

Rules of origin -- one of the most complicated and contentious issues on the table, particularly when it comes to the auto sector -- is on the agenda for the third round which starts Saturday in Ottawa.

David MacNaughton, Canada's ambassador to the U.S., acknowledged Friday that the clock is ticking on the talks overall -- and that negotiators won't be able to take a passive approach if they want the best deal possible.

"We do have an opportunity to be a real powerhouse in the world, and keep our citizens prosperous and happy, and we can't do that simply by playing defence," MacNaughton said following an event in Banff, Alta.

"We've got to really iron out some of the difficulties that have emerged, or some of the things that weren't thought of in 1994, but also look forward 10 years and say, 'Where we want to be there?'

"The one thing that I can absolutely assure you of: I am 100 per cent confident, in terms of these discussions, that there will be some drama before they're over."

But while Canadian officials had been hopeful the U.S. would finally put some flesh on the bones of its auto-sector position over the course of the five-day session, they say it's now uncertain whether American negotiators are ready to show their hand.

Flavio Volpe, president of the Automobile Parts Manufacturers Association, said everyone in government and industry is ready to spring into action the moment the U.S. tables its position but, in the meantime, they're all "circling the airport." He suspects they'll have to continue circling for some weeks yet.

As far as Canadian officials are concerned, automobiles -- specifically, the exodus of auto industry jobs and investment to low-wage Mexico -- are at the root of President Donald Trump's threat to rip up the North American Free Trade Agreement. And resolving the problem will be the key to the success, or failure, of efforts to rewrite the trilateral trade pact.

Hence, the eagerness to find out precisely what is the American bottom line on rules of origin.

"We're waiting with bated breath, I guess, like our Canadian negotiating team and probably the Mexican negotiating team, as to what the U.S. is actually going to propose," says Mark Nantais, president of the Canadian Vehicle Manufacturers' Association.

U.S. Trade Representative Robert Lighthizer opened the first round of negotiations in Washington last month with the aggressive pronouncement that "rules of origin, particularly on autos and auto parts, must require higher NAFTA content and substantial U.S. content." Moreover, he said there must be a way to verify that content.

The U.S. has not gone into any further detail since then. But it's bound to be controversial when they do.

"Trade negotiations are based on the concept of a balance of concessions and the United States explicitly wants an imbalanced result (that favours the U.S.)," says Ted Alden, senior fellow with the Council on Foreign Relations in Washington.

"That's going to be a pretty hard thing for Canada and Mexico to swallow and I've never seen a trade negotiation conducted where that was the starting point."

Under the current terms of NAFTA, at least 62.5 per cent of a vehicle's content must be made in North America to qualify for duty-free access between the U.S., Canada and Mexico -- which is already "the highest content requirement of any trade deal we're aware of," according to Nantais.

Reports in the U.S. suggest the Trump administration wants to raise that to more than 70 per cent and add a requirement that anywhere between 35 and 50 per cent must be made specifically in the United States.

Moreover, the U.S. reportedly wants to add steel and electronics, which aren't currently included, to the list of components whose country of origin must be traced.
 

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