U.S. drops NAFTA bomb­shells

The Prince George Citizen - - SPORTS - Alexan­der PANETTA

PEN­TAGON, United States — The NAFTA talks have now en­tered their most dif­fi­cult phase with the United States be­gin­ning to drop its bomb­shell pro­pos­als on the ne­go­ti­at­ing ta­ble at a just-be­gun fourth round out­side Wash­ing­ton.

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

The just-re­leased de­mand would cre­ate a so-called ter­mi­na­tion clause. It would end NAFTA af­ter five years, un­less its mem­ber coun­tries ex­plic­itly opted to re­new it. That pro­posal was de­liv­ered late Wed­nes­day night.

That comes af­ter the U.S. pro­posed far stricter Buy Amer­i­can rules at the last ne­go­ti­at­ing round, and in the leadup to one of the most im­por­tant pro­pos­als of the en­tire ne­go­ti­a­tion: on rules for auto parts, which could come as early as Fri­day.

“More con­tentious is­sues will be com­ing up very shortly,” U.S. Com­merce Sec­re­tary Wil­bur Ross said dur­ing a panel dis­cus­sion this week at the Den­tons law firm.

“So far the talks have mainly done ba­sic back­ground things. Kind of what I would call boil­er­plate things. Rel­a­tively easy is­sues.”

The other NAFTA coun­tries say they’re le­git­i­mately baf­fled by where the U.S. is headed.

Sources say oth­ers are try­ing to fig­ure out what this hard­line ap­proach sig­nals from the U.S. – open­ing po­si­tions that will be flex­i­ble with some bar­gain­ing; hard de­mands; or a de­sire to poi­son the talks, let them col­lapse, and sim­ply do away with NAFTA.

Some al­lies of U.S. Pres­i­dent Don­ald Trump are more pos­i­tive.

Newt Gin­grich said this week he sees lit­tle ap­petite within the U.S. cab­i­net for the type of tur­moil can­celling NAFTA might cause.

He said Trump’s team is filled with wealthy pro-traders, who sim­ply be­lieve the U.S. needs tougher deals.

Ross him­self said he doesn’t an­tic­i­pate a NAFTA col­lapse, though he added a caveat: “We don’t hope it will (end), we don’t de­sire that it will, we don’t be­lieve that it will, but it is at least a con­cep­tual pos­si­bil­ity.”

Canada and Mex­ico are ve­he­mently op­posed to the five-year ter­mi­na­tion idea, see­ing it as a desta­bi­liz­ing in­vest­ment-killer and an un­ac­cept­able red line. Canada’s am­bas­sador to the U.S. has joked that if the same idea were used in mar­riage li­censes, the di­vorce rate would sky­rocket.

But Ross con­firmed it as the U.S. po­si­tion, and shrugged off the talk of red lines.

“Yes, that’s our pro­posal,” Ross said, adding dis­mis­sively: “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).”

The next big scare could come Fri­day the 13th.

That’s when the group han­dling rules for auto parts meets for the first time in this round, and it’s ex­pected the U.S. is pre­par­ing to level de­mands viewed as non-starters 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. The in­dus­try says many of these com­po­nents sim­ply aren’t made on the con­ti­nent, and warns that if the rules get too oner­ous it might just stop work­ing within NAFTA and start pay­ing tar­iffs.

The de­mands be­ing lev­elled cross sev­eral of the six so-called red lines laid out by Mex­ico’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.

One of­fi­cial says it’s im­por­tant to keep ne­go­ti­at­ing calmly.

“We’re ex­pect­ing some con­tentious pro­pos­als this week,” said the of­fi­cial, a non-Amer­i­can who was not au­tho­rized to speak pub­licly.

“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, it wouldn’t be a ne­go­ti­a­tion.”

Amer­i­can in­dus­try has be­gun sound­ing alarm bells about the po­ten­tial dam­age if NAFTA dies. The U.S. Mo­tor & Equip­ment Man­u­fac­tur­ers As­so­ci­a­tion re­leased a study Thurs­day say­ing it could cost 25,000 to 50,000 U.S. jobs, and warned that too-strin­gent con­tent rules could cost 24,000 jobs.

A team of Sco­tia­bank econ­o­mists agrees the auto sec­tor is far­ing well un­der NAFTA.

It points to data show­ing a surge in U.S. auto em­ploy­ment since the 2008-09 re­ces­sion, with six per cent an­nual em­ploy­ment in­creases that are mul­ti­ple times larger than growth in other man­u­fac­tur­ing sec­tors.

They say Ross re­lies on skewed num­bers to paint an overly grim por­trait, which un­der­es­ti­mates the de­gree of U.S. con­tent in North Amer­i­can cars. But Ross shrugs off the in­dus­try’s com­plaints: “I think you’ll find the car com­pa­nies will adapt them­selves to it.”


Com­merce Sec­re­tary Wil­bur Ross ap­pears be­fore the House Com­mit­tee on Over­sight and Gov­ern­ment Re­form in Wash­ing­ton on Thurs­day. Ross de­liv­ered some of the U.S.’s pro­pos­als dur­ing NAFTA ne­go­ti­a­tions.

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