Economy

What A New NAFTA Deal Might Mean For The Auto Industry

What A New NAFTA Deal Might Mean For The Auto Industry”

Former Canadian prime minister Kim Campbell addresses the Canadian Club in downtown Vancouver, B.C. Wednesday, April 22, 2015.

The United States and Canada have made progress in talks to revise the North American Free Trade Agreement, and officials from the two sides will work together into the night to flesh out areas for further discussion, Canadian Foreign Minister Chrystia Freeland said on Wednesday.

Trump almost tore up the NAFTA pact past year after visiting farmers in Wisconsin, a major USA producer of dairy products that Washington says has been hurt by Canadian protectionism.

However, he said that there could be "room for flexibility" on dairy-market access.

"I think that's where we are". But, it may be a bargaining chip that could be traded away for something else.

Chapter 19 is one of three dispute resolution mechanisms in NAFTA.

The updated deal between Mexico and the U.S. includes new clauses on intellectual property, digital trade and investor disputes.

Chapter 19 allows NAFTA partners to evaluate the fairness of extra taxes placed on products (known as as anti-dumping or countervailing duties) by domestic agencies including such things as the U.S. Department of Commerce, the International Trade Commission (ITC), the Canadian Border Services Agency and the Canadian International Trade Tribunal.

The North American auto industry is a sum of parts made and assembled in Mexico, the US and Canada. As a result, many regional experts and political economists are cautioning that the political gains fostered by the pact could be damaged in the fray of an us-versus-them renegotiation battle that disregards the spirit of community underlying NAFTA's success.

Canadian and USA sources with knowledge of the negotiations have said that giving the Trump administration a victory on dairy is key to concluding a deal.

Levy of the Chicago Council says there are already signs that Mexico and Canada are taking steps to diversify their trade and broader economic relations beyond a less-predictable US. "You can't fix NAFTA without fixing issues with Canada", said Senator Ron Wyden, the top Democrat on the Senate Finance Committee, which oversees trade.

The review panel historically has sided with Canada on the softwood lumber issue.

"We will not sign a deal that is bad for Canadians, and quiet frankly, not having a Chapter 19 to ensure the rules are followed would be bad for Canadians", he said.

Mulroney orchestrated the original Canada-Free Trade Agreement in 1988, which evolved into the current NAFTA agreement. But on the sidelines, President Trump and Prime Minister Justin Trudeau have dug into seemingly irreconcilable positions.

The prime minister staked out Canada's ground as a fresh October 1 deadline and the encroaching American midterm elections cast a shadow over Wednesday's resumption of negotiations in Washington. The president also said the US would be fine if a deal can't be reached with its northern neighbour. "I quite believe that there will be a tripartite NAFTA because I think it's the only kind that can be".

Prime Minister Justin Trudeau says the USA president's aversion to following rules is a key reason Canada can't budge on a dispute settlement provision in a revamped North American Free Trade Agreement. The U.S. has said Canada can still join a preliminary pact it struck with Mexico to replace NAFTA, before the agreement is signed in late-November.

The overall goal is to reach a deal by December 1 so Congress can give its approval to a revised NAFTA before Mexico's new president takes office.

"It would be a giving up of our sovereignty and our identity and that is something that we will simply not accept", Trudeau said in a press conference on Tuesday."We've made it very clear that defending that cultural exemption is something fundamental to Canadians".



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