Au­tomak­ers blast Trump’s de­mands

Pres­i­dent’s ‘ex­treme’ quo­tas threaten to kill NAFTA talks, Big Three com­pa­nies warn

Toronto Star - - NEWS - DANIEL DALE WASH­ING­TON BUREAU CHIEF

WASH­ING­TON— NAFTA has helped fuel the come­back of the big Amer­i­can au­tomak­ers, and those three com­pa­nies are “very con­cerned” that the rene­go­ti­a­tion will col­lapse be­cause of Pres­i­dent Don­ald Trump’s “ex­treme” de­mands, a rep­re­sen­ta­tive said Thurs­day.

Matt Blunt, pres­i­dent of the Amer­i­can Automotive Pol­icy Coun­cil, which rep­re­sents the pol­icy in­ter­ests of Gen­eral Mo­tors, Ford and Fiat Chrysler, said the North Amer­i­can Free Trade Agree­ment has been im­por­tant to the com­pa­nies’ tran­si­tion from dire straits to boom­ing sales.

Killing the deal would im­pose a $10bil­lion (U.S.) tar­iff cost on them, he said, “equal to, es­sen­tially, the cap­i­tal in­vest­ment we’re mak­ing on an an­nual ba­sis.” He did not de­tail how he ar­rived at that fig­ure.

Blunt said he re­tains some op­ti­mism. But he made clear that the au­tomak­ers be­lieve the ne­go­ti­a­tions are go­ing poorly be­cause of Trump’s pro­pos­als — and think there is a real risk Trump will fol­low through on his fre­quent threat to ter­mi­nate NAFTA en­tirely.

“Given the U.S. de­mands, and the Mex­i­can and Cana­dian re­sponse, we’re very con­cerned that the ne­go­ti­a­tions could break down, col­lapse. We think other peo­ple ought to be con­cerned about that. Be­cause the ram­i­fi­ca­tions for not hav­ing a NAFTA are se­vere,” he said at a Wash­ing­ton In­ter­na­tional Trade As­so­ci­a­tion panel dis­cus­sion.

The U.S. auto in­dus­try is ve­he­mently op­posed to the Trump auto pro­posal that Canada and Mex­ico con­sider a non-starter. Though the U.S. gov­ern­ment usu­ally en­ters trade ne­go­ti­a­tions bear­ing auto pro­pos­als that are favoured by the pow­er­ful do­mes­tic in­dus­try, the Trump ad- min­is­tra­tion has so far dis­missed the in­dus­try out­cry and pur­sued the pro­tec­tion­ist agenda on which the pres­i­dent cam­paigned.

Trump’s team has pro­posed that a car should not qual­ify for tar­iff-free treat­ment un­less 50 per cent of it is made in the U.S. it­self — there is no U.S. con­tent re­quire­ment at all in the cur­rent agree­ment — and that the re­quire­ment for North Amer­i­can con­tent be raised from 62.5 per cent to 85 per cent.

Blunt, a former Repub­li­can gover­nor of Mis­souri, called this “an ex­treme pro­posal” and “to­tally counter to the ob­jec­tives of the Trump ad­min­is­tra­tion.” As in­de­pen­dent in- dus­try ex­perts have ex­plained, Blunt said, it would likely cause au­tomak­ers to do more of their man­u­fac­tur­ing out­side the NAFTA zone, rather than prompt them to hire more U.S. work­ers — sim­ply pay­ing the tar­iff rather than eat­ing the larger cost of com­ply­ing with the re­quire­ment.

“The busi­ness de­ci­sion here is not very dif­fi­cult,” he said.

Blunt’s words add to the gloom sur­round­ing the ne­go­ti­a­tions as the fifth round of talks ap­proaches. The fourth round ended in pub­lic ac­ri­mony be­tween Canada and the U.S., with For­eign Af­fairs Min­is­ter Chrys­tia Free­land ac­cus­ing the U.S. of try­ing to un­der­mine the agree­ment and U.S. Trade Rep­re­sen­ta­tive Robert Lighthizer call­ing Canada and Mex­ico overly re­sis­tant to change.

Lighthizer also railed against trade deficits, one of Trump’s main fo­cuses even though econ­o­mists say they are a poor way to mea­sure the health of a trad­ing re­la­tion­ship. Blunt pre­dicted that killing NAFTA would ac­tu­ally cause U.S. trade deficits to in­crease.

Kevin Dempsey, se­nior vice-pres­i­dent of the Amer­i­can Iron and Steel In­sti­tute, said the same, and he called NAFTA “a suc­cess” for the steel in­dus­try Trump cam­paigned on cham­pi­oning.

Dennis Darby, chief ex­ec­u­tive of the Cana­dian Man­u­fac­tur­ers and Ex­porters, said the death of NAFTA is “prob­a­bly our worst night­mare.” The fifth round is sched­uled to be­gin next Fri­day, in Mex­ico City, with some ad­di­tional talks in the two

days prior.

CHRIS YOUNG/THE CANA­DIAN PRESS FILE PHOTO

Don­ald Trump’s team is propos­ing that a car should not be tar­iff-free un­less 50 per cent of it is made in the U.S.

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