Uncertainty likely to cost consumers

OTTAWA — Under normal circumstances, the negotiation of a trade pact between countries should result in benefits for consumers, say experts watching the North American free trade talks in Washington.

But with Donald Trump driving the agenda for the American side, some warn that the uncertainty generated by the negotiation of a new NAFTA will ultimately hurt consumers.

“Nothing that’s going down right now in Washington should be presented as being a win from a consumer point of view, or an economic point of view,” says Dan Ciuriak, senior fellow at the Centre for International Governance Innovation. “This is protectionism, cost-raising and uncertainty-raising ... Compared to the status quo, (consumers) are going to be worse off.”

The preliminary agreement between Mexico and the U.S. announced Monday would require that 75 per cent of the parts in any vehicle sold in North America be produced in the U.S. or Mexico. The current requirement is that about 62 per cent be produced in the U.S., Mexico or Canada.

While final details have yet to be laid out, what has been seen so far indicates that automakers could soon be dealing with more complex trading rules that will add costs to manufacturing and ultimately hurt consumers, said Patrick Leblond, an international relations professor at the University of Ottawa.

“It doesn’t look like prices will come down, and it seems they are likely to increase as a result,” he said.