U.S. arrives at talks with two bombshell demands
WASHINGTON, D.C. — The NAFTA talks have 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 indicated 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 today.
”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.”
The other NAFTA countries say they are baffled by where the U.S. is headed.
Sources said Canada and Mexico are trying to figure out what this hardline U.S. approach signals: 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 that he sees little appetite within the U.S. cabinet for the type of turmoil that cancelling NAFTA might cause. He said Trump’s team is filled with wealthy pro-traders, who believe the U.S. needs tougher deals.
Ross 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. The next big scare could come today. The group handling rules for auto parts will meet for the first time in this round, and it’s expected that the U.S. will have 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.