Harsh U.S. Demands Threaten NAFTA Talks

Glum negotiators worry that “pretty harsh, pretty horrible” demands by U.S. negotiators could end hopes of updating the 23-year-old North American Free Trade Agreement, Reuters reports.

Progress appears stalled as envoys from Canada, Mexico and the U.S. slogged through a fourth round of meetings late last week in Washington, D.C. Observers say the U.S. proposals appear likely to at least push the talks beyond a self-imposed year-end deadline to finalize changes that would satisfy the Trump administration’s “America First” agenda.

Trump has signaled he would consider replacing the current agreement with one-on-one trade pacts unless NAFTA can be recast to repatriate jobs and shield domestic businesses from foreign competition. Critics claim the U.S. position ignores the realities of the global economy and will ultimately raise prices and hurt job growth.

Jaime Serra, a former Mexican trade minister who helped negotiate the original NAFTA pact, declares to Reuters that U.S. proposals are “practically absurd.” Canadian chief negotiators Francois-Philippe Champagne tells CBC radio that his team wants to “be constructive” and offer “alternative proposals.”

The U.S. aims to raise the level of North American content required to qualify cars and trucks for tariff-free shipping in the NAFTA zone to 85% from the current 62.5%— with 50% of all content for those vehicles coming from the U.S. Reuters says the current local content ratio is already the world’s highest for any trading bloc.

The U.S. further proposes to modify NAFTA’s mechanism for resolving trade disputes among the participating countries to make it easier for the U.S. to win such cases and impose punitive import taxes.

Finally, the U.S. is demanding a “sunset clause” that would institute further reviews of NAFTA every five years. Critics complain that such a mechanism would introduce uncertainty about future protectionist measures and hobble further investment.