US hopes to finish auto deal and turn to other issues
Among those other issues is access to the Canadian dairy market. However, Canada is unlikely to allow our system of supply management in the area to be negotiated away. It is too explosive an issue politically.
If the auto issue is solved and Canada accepts it as well, the discussions could move on to the sunset clause and dispute settlement panels. This is according to people who asked not to be named due to the privacy of the talks according to a Bloomberg article.
No official information on these negotiations of the utmost importance to the public seems ever to come out. So much for the value of transparency.
NAFTA is, as Prof. Gordon Laxer of the University of Alberta puts it, a corporate rights agreement not a free trade agreement in the traditional sense. As such, its contents and what is being discussed are not to be shared with the public.
The press office of both Mexico’s Economy Minister and of US Trade Representative Robert Lighthizer declined to comment. The press are giving nothing except anonymous leaks.
U.S. worries that U.S. auto jobs move to Mexico for low wages
The U.S. is looking for ways to overcome the Mexican advantage of low wages which many global auto makers see as a good reason to move plants there away from the US where wages are higher. On this issue Canada’s interests align with those of the U.S. Jerry Dias whose Unifor union represents Canadian auto workers has long complained as well about wage and worker’s rights disparities that lead companies to move to Mexico.
Mexican officials meet with U.S. Trade Representative Lighthizer
Ildefonso Guajardo, Mexico’s Economy Minister, Luis Videgary the Foreign Minister, and Jesus Seade who represents the incoming Mexican President Lopez Obrador, met on Wednesday with Lighthizer in Washington. Guajardo said after the meetings that they would resume talks at 10 a.m. on Thursday. He said they were definitely encouraged to keep on working.
When he was asked if the negotiations could be finished this week on the auto issues, he only said that nothing is agreed until everything is agreed. In other words he did not answer the question. This is the third straight week of negotiations between the two nations with Canada sitting on the sidelines. The anonymous three people Bloomberg relies on for information said that the talks were nearing an accord on content and salaries for auto manufacturing.
The U.S., Canada, as well as Mexico, are pushing to have an agreement for Trump and the present Mexican president Pena Nieto to sign before the new Mexican president takes office on December 1. Even though Canada has not been involved in recent talks, both Canada and Mexico insist they expect NAFTA to remain as a three-country agreement. Canada is expected to soon rejoin the talks.
The sunset clause remains an issue
The sunset clause would end NAFTA after five years unless the three nations agree to continue it. As Prof. Laxer pointed out the agreement is basically a corporate rights agreement. Companies making investments in manufacturing want certainty, whereas with the sunset clause there will be doubts about future tariff levels and other corporate protections. Both Canada and Mexico object to the clause. Mexican Economy Minister Guajardo said that the sunset clause formed part of the most complex issues.
Moises Kalach the trade head of the Mexican business chamber CCE said in an interview: “A free-trade agreement is supposed to provide certainty, and this would hurt investment in Mexico and the competitiveness of North America. It’s not something we can work with.”
The new regulations on autos
The Mexican newspaper El Economista reported that Mexico has accepted raising the North American content requirement to the 75 percent level demanded by the U.S. but over a period of five years. This is up from the present 62.5 percent level. However the U.S. had originally asked for 85 percent.
Guajardo also said in a radio interview that Mexico is ready to accept wage requirements near the 40 percent of salaries of at least $16 dollars an hour a position proposed by the U.S. However, when asked to comment about this, Guajard’s press office referred only his earlier comments that Mexico had auto proposals on the table. The office declined to say what they were. More lack of transparency. Lighthizer’s office would not comment either.
Some argue that Canada should dump NAFTA
Professor Laxer notes that chapter 11 of NAFTA gives corporations the right to sue the Canadian government if it passes laws that hurt the anticipated profits of corporations. Wealthy foreign corporations have already sued Canada successfully eight times, mostly over environmental protection and resource management laws. So far the Canadian taxpayer has had to fork out $314 million.
Perhaps the worst flaw of all is the proportionality issue with is not even on the table or even mentioned by most in mainstream press accounts, as for example by Bloomberg.
Laxer claims: “NAFTA’s biggest flaw is chapter 6—its energy “proportionality” clause. It obliges Canada to make available for export three-quarters of our oil and half our natural gas to the U.S. — even if Canadians are shivering in the dark in an international oil crisis caused by a major Middle East war. Chapter 6 hinders Canada from reducing oil exports in the West to ship the oil to Canadians in the East, who rely on oil imports. Even worse, chapter 6 prevents Canada from reducing the proportion of fuels exported from Alberta’s tarsands and fracking. Two research reports I wrote show that retaining proportionality would lock in an additional 1,488 megatonnes of greenhouse gases between now and 2050 and likely torpedo Canada’s Paris climate promises.”
