The United States on Wednesday laid down a tough line for modernizing the North American Free Trade Agreement, demanding major changes to the pact that would reduce US trade deficits with Mexico and Canada and increase USA content for autos.
Canadian Foreign Minister Chrystia Freeland suggested on Monday that Ottawa could walk away from the talks if the United States insisted on scrapping the mechanism to resolve trade disputes between the three Nafta countries. Some officials in Canada and the USA have identified one goal of tougher labour rules: increasing Mexican wages, to make auto plants in the other countries more affordable.
The existing rules of origin allows the autos with a regional value content of 62.5 percent or higher to qualify for shipping them duty-free in North America.
Lighthizer highlighted the United States' trade deficits with both Canada and Mexico as examples of the failure of the trilateral trading pact over the course of the last two decades.
He also called for tougher labour standards.
Wednesday's kickoff is the culmination of a process that began in May, when Lighthizer formally notified Congress that the administration would renegotiate the deal "to support higher-paying jobs in the United States and to grow the USA economy".
We hope wise and level heads in Washington will heed the strong arguments for a new trade deal that's fair to every partner. It might have to provide more access to our dairy market - but it should require the U.S.to rethink its own generous farm subsidies first.
"The industry is so large... and the taxes paid amount to billions of dollars every year". It has resulted in strengthened North American manufacturing supply chains, especially with key customer groups like the North American automotive industry.
"I'm skeptical that you can fundamentally rewrite the agreement in six to eight months", says Matthew Rooney, economic growth director at the Bush Institute in Texas. "Canada buys more from the US than China, the United Kingdom and Japan combined". I look forward to working with Secretary Guajardo and Minister Freeland on this very important effort. The controversial trade deal has been blamed for auto companies moving production of smaller cars to Mexico. It's a trade off. He said it was not a good idea to add country-specific content requirements to the agreement. Business groups say an exit could jeopardize 14 million jobs that rely on cross-border trade. We see no rational justification for it. They should stand firm on that. We have a lot to offer. "We highly encourage (negotiators) to get it done and get it done fast", he said of NAFTA.
Trump vowed to either fix it or withdraw from the plan completely.
Canadian Foreign Minister Chrystia Freeland, who suggested this week her country could walk away if the US insisted on scrapping a NAFTA mechanism to resolve trade disputes, also took a swipe at the USA fixation on cutting its trade deficits. They said the deficit does not impact the continuously growing economy of the region.