Trump's NAFTA Partners Stand Their Ground Against New Auto Rules

Mexico Economy Minister Guajardo speaks with Bloomberg’s Eric Schatzker at the World Economic Forum in Davos

Foreign Affairs Minister Chrystia Freeland met January 25 with Lighthizer in Davos, Switzerland, and a well-placed source said they discussed the USA demands on continental content requirements for automobiles, NAFTA's dispute resolution mechanisms, and for a sunset clause.

Canada is hoping that by suggesting ideas to boost the amount of North American content in cars and trucks, the US will back off its demand that all vehicles made in Canada and Mexico contain at least 50 per cent USA -made content.

While Canada's chief NAFTA negotiator continues to insist the effort to salvage the North American trade framework is completely unrelated to the CPTPP initiative, there was an interesting qualifier attached to his assessment.

According to sources that asked to remain anonymous, the administration of president Donald Trump is displeased by the demand presented by Canada against the United States before the World Trade Organization (WTO) in the field of antidumping tariffs and compensations. It wants 50 percent of the parts to be made in the United States.

"We make a good deal on NAFTA, and, say, I'm going to take a small percentage of that money and it's going toward the wall".

Under the trilateral trade deal, agricultural trade has quadrupled, with Canada and Mexico among the top markets for American agricultural exports.

"They just weakened our entire bargaining position as it relates to NAFTA", Dias said after the news broke.

Canada is floating the idea that North American content in autos would be higher if the value of software and other high-tech equipment made on the continent were taken into account, said three well-placed sources, who declined to be identified given the sensitivity of the situation.

US demands creating friction with Canada, Mexico. "So we want to create a boat where the United States is on board", Alpin says.

Senator Chuck Grassley is a Republican U.S. senator from Iowa and chairman of the Senate Judiciary Committee. "Here in Canada, we think it" - the new NAFTA - "is a mistake" especially because of the labor standards conflict.

"I know what Canada's saying is, is there really daylight between what Canada and the USA wants to see in a new North American trade agreement. if that's what a vehicle is going to look like 10-15 years from now?"

Freeland called on political and business leaders at Davos to do more to build support for trade, saying it's proven that protectionism doesn't work.

Freeland's conversation with her American NAFTA counterpart occurred on the sidelines of the World Economic Forum meeting in Davos.

"If you look at what has happened under NAFTA, we've been incredibly successful".

Canada's chief central banker said the ongoing talks are already hurting business investment and that it's hard to predict the impact of the death of NAFTA.

However, he said it gives the industry a sense of urgency to fight so that NAFTA doesn't cause a further erosion. "But I think that he has now come to realize that agriculture has been benefited by a NAFTA agreement".

Trudeau said a deal is "eminently possible". Trudeau says his government "stood up for Canadian interests" in the negotiations.

The US National Chicken Council tweeted this week that Mexico and Canada were 2 of its most important US chicken export markets, linking to a statement a year ago that said poultry exports were among the most vital of all US agricultural exports.

As the tech sector becomes an increasingly large part of the auto industry, Mr. Volpe said, these proposals will help keep future jobs in North America - rather than seeing them move to China.