Stricter rules on auto parts a U.S. goal in NAFTA revamp
WASHINGTON — Donald Trump’s new point man on trade negotiations has shed some light on key goals in revamping the North American Free Trade Agreement, hinting Friday that priority No. 1 involves more automobile parts sourced close to home.
The newly confirmed U.S. commerce secretary told a television interviewer he intends to move quickly on NAFTA negotiations and wants to be aggressive on trade-related issues to spur domestic manufacturing.
Wilbur Ross was asked what he considers the most egregious parts of the current agreement, and the first thing he mentioned was interpreted by several observers as a reference to the formula for calculating car-part imports.
“First of all, I think the rules of origin were far too lenient [in NAFTA],” Ross told CNBC.
“Rules of origin means how much goods can come in from countries outside NAFTA — and yet get all the benefits of absolution from tariffs. … I think those can be tightened up quite a bit.”
One observer said that as a billionaire investor in various industries, including car parts, Ross is an expert on these rules.
Eric Miller said he expects there will be winners and losers from these changes within Canada.
Smaller companies might do better than those requiring Asian parts, he said.
A former Canadian official who worked on the 2009 auto bailout and now advises companies on trade, Miller said there’s reason to be concerned about the types of changes Ross has in mind.
He said many parts sourced from Asia are sourced there because it’s the only place they’re available.
“[It] is pretty scary. Because the practical reality is it will drive costs up.”