The Hamilton Spectator

New NAFTA bombshell looming?

Negotiator­s braced Friday for a non-starter U.S demand on auto parts

- ALEXANDER PANETTA

PENTAGON, UNITED STATES — The NAFTA negotiatio­ns have now entered their most difficult phase with the United States beginning to drop its bombshell proposals on the negotiatin­g table.

The reality was on full display Thursday as Prime Minister Justin Trudeau arrived for his first state visit to Mexico.

U.S. officials had foreshadow­ed that this week-long round of negotiatio­ns would be where the most contentiou­s discussion­s opened and that is coming to fruition, with the American side levelling one demand deemed a non-starter — and preparing to deliver another one.

The latest just-delivered demand would create a so-called terminatio­n clause.

The clause would end NAFTA after five years, if its member countries fail to explicitly renew it.

That comes after the U.S. proposed strict Buy American rules.

U.S. Commerce Secretary Wilbur Ross confirmed the five-year terminatio­n idea.

He shrugged off the fact that other NAFTA countries are vehemently opposed to it, seeing it as a destabiliz­ing investment-killer and unacceptab­le red line.

“Yes, that’s our proposal,” Ross said during a panel discussion Wednesday.

“Red lines, blue lines, green lines, purple lines. Those are just colours in a rainbow ... It’s a big, complicate­d negotiatio­n and the key is having an overall package that works (at the end).”

However, one of the most important proposals of the entire negotiatio­n — on rules for auto parts — could come as early as Friday.

It’s expected the U.S. is preparing to level demands viewed as nonstarter­s by Canada, Mexico and the auto industry.

One report said the planned demand would require 85 per cent of a car’s parts to come from North America, and half of them to come from the U.S.

But the industry says many of these components simply aren’t made on the continent.

And they warn that if the rules get too onerous they might just stop working within NAFTA and start paying tariffs.

Again, Ross confirmed that U.S. policy is headed in that direction, and shrugged off the concerns: “I think you’ll find the car companies will adapt themselves to it,” he said.

The main thing other countries are trying to figure out about this hardline approach from the U.S. is what it signals:

Flexible opening positions that will change with time, inflexible demands, or a desire to poison the talks and do away with NAFTA.

Officials in Canada say they’re legitimate­ly baffled by where the U.S. is headed.

As for Mexico, the demands being levelled cross several of the six so-called red lines laid out in that country’s Senate — which says it would refuse any deal that includes a terminatio­n clause, a U.S. auto

content requiremen­t or the end of the Chapter 19 dispute-resolution system.

An official in one of those two countries says it’s important to keep negotiatin­g calmly.

“We’re expecting some contentiou­s proposals this week,” he said.

“Having said that, no one should lose sight of the fact you have three teams of negotiator­s working to make progress on the deal and they are making progress.

“If there weren’t contentiou­s proposals,” the official continued, “it wouldn’t be a negotiatio­n.”

 ?? SEAN KILPATRICK, THE CANADIAN PRESS ?? Foreign Affairs Minister Chrystia Freeland, Prime Minister Justin Trudeau and Minister of Internatio­nal Trade Francois-Philippe Champagne take part in a roundtable discussion in Mexico City on Thursday.
SEAN KILPATRICK, THE CANADIAN PRESS Foreign Affairs Minister Chrystia Freeland, Prime Minister Justin Trudeau and Minister of Internatio­nal Trade Francois-Philippe Champagne take part in a roundtable discussion in Mexico City on Thursday.

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