Trumps’ demands and automakers’ negative reaction
Trump has been pushing for companies to build more auto assembly plants in the US as part of his America First campaign hoping to bring more jobs to the U.S. However, U.S. negotiators are also proposing major changes to the rules of origin to ensure that more parts made in the U.S. are used in the vehicles assembled in the US. Auto industry analysts claim that this type of change could actually undermine Trump’s own America-first goal.
Matt Blunt, a former Missouri governor, who now heads the American Automobile Policy Council said: “We view the modernization of NAFTA as an important opportunity to update the 23-year-old agreement and set the stage for an expansion of U.S. auto exports. We also appreciate the opportunity to directly address the industry’s concerns with the administration’s rule of origin proposal.”
The Council represents the Ford Motor Co., General Motors, and FIat Chrysler, the big three.
The three CEO’s also attended that White House meeting, including Sergio Marchionne of Fiat Chrysler, Mary Barra of GM, and Joe Hinrichs, president of global operations for Ford. The US trade representative Robert Lighthizer and National Economic Director Gary Cohn also were scheduled to attend the meeting.
Pence’s office issued a statement that emphasized commitment to growing manufacturing in the US, reducing trade deficits, and aiding the car industry.
The sixth round of the NAFTA 2.0 talks will not take place until late January in Montreal, Canada.
NAFTA negotiations make little headway on major issues
The lack of progress was discussed in a recent Digital Journal article.. The three representatives issued a joint statement saying that they were optimistic about finishing the negotiations as soon as possible.
After the statement the U.S. trade representative Robert Lighthizer complained about the lack of headway in the negotiations. He said that neither Canada nor Mexico were willing to address issues that could lead to a rebalanced agreement. However, the U.S. is pushing for measures that many global companies such as those in its own auto industry obviously will not agree to. Canada and Mexico reject Trump’s demands as well.
Worries about U.S. withdrawal from NAFTA already having negative effects
The U.S. Grains Council(USGC) president Tom Sleight said: “Our competitors are starting to increase their sales. The U.S. is no longer seen as a reliable supplier, which is really alarming news for us in terms of the investment we’ve put into making our economies and our businesses intertwine over 35 years.”
Trudeau works on expanding trade with China
Canada’s response to what is happening is to expand trade with other countries than the U.S. Trudeau has just gone to China with expanding trade top on his agenda. As the U.S. becomes more protectionist, both Canada and Mexico will no doubt try to expand their trade with other countries than the U.S.
Canada along with ten other countries is trying to go forward with the Trans-Pacific Partnership(TPP) a deal abandoned by Trump. China is not part of the deal.
Will Canada become a world leader for free trade replacing the US?
Given Canada’s relatively weak power and small population this is unlikely. Our geographical relation to the US also makes it likely that the US will remain our main trading partner.
Dominique Anglade, deputy premiere of the province of Quebec and the minister responsible for trade said: “We have to be realistic. You can’t say that something will replace the United States.”
However, the Trump policy has encouraged Canada, Mexico, and other countries to reach deals and increase trade without relying on the U.S. lead. This is probably a plus since if the U.S. is involved as leader, given its size and power its own interests but as seen through the eyes of powerful global corporations will usually prevail.
Of course those who see the interests of global corporations and the U.S. as aligned such as Stefan Selig a former undersecretary of state under the Obama administration view the withdrawal of the U.S. from agreements such as the TPP as a loss. Selig said: “The timing of it serves as an extraordinary indictment, that the other 11 countries reached a TPP-lite agreement. The notion that we are not sitting at that table to be able to influence those countries strikes me as an extraordinary missed opportunity.” From the Trump point of view it was no loss to abstain from an agreement that did not put America First.
Pressures are building on Trump to soften NAFTA demands
There will be enormous pressure on Trump from powerful corporations and interest groups to modify U.S. demands so that NAFTA is reformed in their interests and not rejected. No doubt the globalized corporate powers will trot out their own trickle down theory.
The increased trade and exports by global but U.S.-based corporations, the argument goes, will increase jobs in the U.S. and help balance trade, especially if at the same time right-wing policies of few environmental regulations and weakening of labor power make the U.S. more competitive with other countries.
All Trump has to do is to give up all the populist ideas that helped him get elected. He has already done that on foreign policy and rejected any reduction in U.S. foreign military intervention so no doubt he will find a way to do the same thing to please the Republican establishment and U.S. global corporate interests on the NAFTA trade issue.
