Many Republicans tell Trump to ease NAFTA demands

Growing number of voices raising alarm amid fears pact will likely be in shambles

In what Canada sees as a show of solidarity, dozens of American lawmakers, predominantly Republicans, are urging the Trump administration to cool off on some of its NAFTA demands.

As a fifth negotiating round for an update to the trilateral deal gets underway Friday in Mexico, Canadian lobbying efforts persist in what officials have been calling a “full court press.” But some are predicting that the deal looks likelier and likelier to fall apart completely.

American business and industry organizations had already raised alarms over some of President Donald Trump’s more contentious asks, including stringent new rules of origin for North American automobiles, but politicians are increasingly joining the chorus.

A letter to trade representative Robert Lighthizer Wednesday garnered signatures from 57 Republicans and 15 Democrats in Congress. “While we agree that (the North American Free Trade Agreement) should be updated to help our companies better address the challenges of the 21st century economy, it should not be terminated,” the letter says.

“Unfortunately, it appears that several U.S. proposals under discussion in the NAFTA negotiations, including the U.S. motor vehicle rule of origin proposal, would eliminate the competitive advantages provided to the U.S. auto industry under the current NAFTA rules — or lead to rejection by Canada and Mexico and the end of the agreement.”

Either outcome would “adversely affect the U.S. auto industry,” the members of Congress argue, “reducing sales, production, and exports and harming U.S. workers in the process.”

Current rules require that vehicles assembled in Canada, Mexico or the U.S. contain 62.5-per-cent North American content to benefit from duty-free access across the continent. Americans are demanding that the bar be raised to 85 per cent, with fully half sourced from the U.S.

Auto industry groups in all three countries have expressed their discontent, with the American Automotive Policy Council telling Reuters a U.S.-specific requirement “would greatly complicate” companies’ abilities to take advantage of the trade zone.

Canadian and Mexican negotiators have positioned themselves against this proposal and several others that they see as unacceptable. Now legislators from Trump’s own party are adding to a chorus of voices concerned the trade deal could end in shambles as a result.

Three Republican senators drafted a letter to the administration this week chastising a heavy focus on trade deficits. Another letter from at least eight Republicans raised concerns over a proposed sunset clause that would require all three leaders to rubber-stamp NAFTA every five years, or let it die.

Meanwhile, a recent economic report from the Royal Bank of Canada predicts a “bad” result, or complete scrapping of the deal, appears “increasingly likely.”

If the agreement is torn up but parties continue to meet commitments set out by the World Trade Organization, the bank predicts Canada’s gross domestic product would lower by a full percentage point within five to 10 years. A greater share of the negative impact would be borne by highly trade-sensitive industries such as the auto manufacturing sector, says the report.

But from the Canadian point of view, some parts of the deal simply cannot move forward unless Americans renege on their hardline positions.

Ministers in charge of NAFTA acknowledged at the last round that more time is needed to trudge through those conversations. This time around, they are not even planning to meet. A Canadian press release Wednesday said there was no need because the three had face time on the sidelines of the AsiaPacific Economic Cooperation summit last weekend.

An initial push to conclude by the end of this year now looks impossible. It is far from guaranteed that talks can finish before presidential elections in Mexico next summer, and midterm elections in the U.S. next fall.

That’s if talks even proceed, and none of the parties get frustrated enough to simply walk away from the table as early as this weekend.

Not to mention repeated threats from Trump that he will simply chuck the no-good, very-bad deal into the garbage.

Whether the president can do so single-handedly is disputed. Some lawmakers have said publicly they anticipate a legal battle would ensue over whether a Congress — apparently chock-full of NAFTA supporters — can block him.