Canada plans to lecture U.S. on auto parts
Fresh approach to NAFTA negotiations
MEXICO CITY • Canadian negotiators intend to provide a briefing to their American peers on how their auto parts proposals would devastate their own domestic industry.
Multiple sources say Canada plans to present information at the current round — not a counter-proposal. And they expect Mexico will also hold off presenting a counteroffer on auto parts, which is shaping up to be a key issue.
They say the countries are more likely to make progress on less-controversial files while saving the thornier ones for later, with auto parts decidedly parked in that difficult category.
A U.S. proposal at the last round drew a backlash from Canada, Mexico, the auto industry, and dozens of American lawmakers.
The current NAFTA talks in Mexico City will include four days of discussions on rules of origin for different products, including auto parts.
The American proposal had four main components: insisting half of a car’s parts be from the U.S. to avoid a tariff, drastically increasing the amount of content required from North America overall, toughening the method for calculating the parts percentages, and insisting that companies implement all those changes within a year.
Some auto-parts representatives say that package is so unrealistic it would prompt companies to move production out of North America, build in Asia, and just pay the import tariff, which starts at 2.5 per cent for cars entering the U.S.
The Canadian presentation comes after weeks of consultation with industry players. One of them is present at the talks in Mexico and he welcomes the Canadian approach.
Flavio Volpe says the U.S. proposal never made commercial sense, and appeared designed to shock other countries’ negotiating parties.
So he says it’s logical those other countries would try to reset the conversation — rather than engage on unrealistic terms.
“You turn around and say, ‘OK, guys, if we accept your proposal as your real intention, your real intention is hurtful to your own interests. Do you know that?’ ” Volpe said.
“You want to hit us? You hit your own (sector) by 20 per cent — that’s ridiculous.”
A union leader agrees with Volpe, who represents the companies that make parts.
Unlike the companies, Unifor leader Jerry Dias welcomes more stringent domestic content requirements. But he agrees the American proposal, as designed, should not be the baseline for a discussion.
Dias asked: why would Canada engage in a serious back-and-forth on auto parts as long as U.S. demands, like a 50-per-cent American content requirement per vehicle, are seen as so impractical they’re being derided even within the U.S.?