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Money U.S. automakers warn Trump’s ‘extreme’ demands threaten NAFTA talks, say deal fuelled their comeback

20:36  09 november  2017
20:36  09 november  2017 Source:   thestar.com

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WASHINGTON— NAFTA has helped fuel the comeback of the big American automakers , and those three companies are “very concerned” that the renegotiation will collapse because of President Donald Trump ’ s “ extreme ” demands , a representative said Thursday.

U . S . automakers warn Trump ’ s ‘ extreme ’ demands threaten NAFTA talks , say deal fuelled their comeback . A new document from the American side illustrated those big gaps. The U . S . released an updated version of a July document published before negotiations started

New Ford Edges sit on a production line at a plant in Oakville, Ont., in a Feb. 26, 2015, file photo.© THE CANADIAN PRESS/Chris Young New Ford Edges sit on a production line at a plant in Oakville, Ont., in a Feb. 26, 2015, file photo.

WASHINGTON—NAFTA has helped fuel the comeback of the big American automakers, and those three companies are “very concerned” that the renegotiation will collapse because of President Donald Trump’s “extreme” demands, a representative said Thursday.

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Matt Blunt, president of the American Automotive Policy Council, which represents the policy interests of General Motors, Ford and Fiat Chrysler, said the North American Free Trade Agreement has been important to the companies’ transition from dire straits to booming sales.

Killing the deal would impose a $10 billion (U.S.) dollar tariff cost on them, he said, “equal to, essentially, the capital investment we’re making on an annual basis.” He did not detail how he arrived the figure.

Blunt said he retains some optimism. But he made clear that the automakers believe the negotiations are going poorly because of Trump’s proposals — think there is a real risk Trump will follow through on his frequent threat to terminate NAFTA entirely.

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The auto industry is vehemently opposed to a Trump plan to require 50 per cent U . S . content in cars, saying it would likely cause automakers to do more of their manufacturing outside the NAFTA zone.

Lawmakers as well as agricultural and industrial groups have warned Trump not to quit NAFTA , but he said that may be the outcome. On Monday, automakers from Detroit and around the world urged the Trump administration not to quit NAFTA and to back away from some of its demands in the

“Given the U.S. demands, and the Mexican and Canadian response, we’re very concerned that the negotiations could break down, collapse. We think other people ought to be concerned about that. Because the ramifications for not having a NAFTA are severe,” he said at a Washington International Trade Association panel discussion.

The U.S. auto industry is vehemently opposed to the Trump auto proposal that Canada and Mexico consider a non-starter. Though the U.S. government usually enters trade negotiations bearing auto proposals that are favoured by the powerful domestic industry, the Trump administration has so far dismissed the industry outcry and pursued the protectionist agenda on which the president campaigned.

Trump’s team has proposed that a car should not qualify for tariff-free treatment unless 50 per cent of it is made in the U.S. itself — there is no U.S. content requirement at all in the current agreement — and that the requirement for North American content be raised from 62.5 per cent to 85 per cent.

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In his first 100 days, Trump threatened to withdraw from NAFTA if Canada and Mexico refused to renegotiate. On July 1, 2018, Trump said he would not approve any deal until after the U . S But U . S . manufacturers want to keep the panel. They agree it protects their foreign investments.

As the trade talks began on Wednesday, Mr. Trump , seated in the Oval Office beside Prime Minister Justin Trudeau of Canada, said it was “possible” that the United States would drop out of Nafta . “It’ s possible we won’t be able to make a deal , and it’ s possible that we will,” the president said .

Blunt, former Republican governor of Missouri, called this “an extreme proposal” and “totally counter to the objectives of the Trump administration.” As independent industry experts have explained, Blunt said it would likely cause automakers to do more of their manufacturing outside the NAFTA zone rather than prompt them to hire more U.S. workers — simply paying the tariff rather than eating the larger cost of complying with the requirement.

“The business decision here is not very difficult,” he said.

Blunt’s words add to the gloom surrounding the state of the negotiations as the fifth round of talks approaches. The fourth round ended in public acrimony between Canada and the U.S., with Foreign Affairs Minister Chrystia Freeland accusing the U.S. of trying to undermine the agreement and U.S. Trade Representative Robert Lighthizer calling Canada and Mexico overly resistant to change.

Lighthizer also railed against trade deficits, one of Trump’s main focuses even though economists say they are a poor way to measure the health of a trading relationship. Blunt predicted that killing NAFTA would actually cause U.S. trade deficits to increase.

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Trump says terminating NAFTA would yield the 'best deal ' in renegotiations. On Monday, automakers from Detroit and around the world urged the Trump administration not to quit NAFTA and to back away from some of its demands in the negotiations.

President Trump Slams Canada' s `Decades of Abuse' After NAFTA Talks Stall. We make new deal or go back to pre- NAFTA !” Trump said . Trudeau reiterated his government wouldn’t concede to U . S . demands to dismantle its dairy system, known as supply management.

Kevin Dempsey, senior vice-president of the American Iron and Steel Institute, said the same, and he called NAFTA “a success” for the steel industry Trump campaigned on championing. Dennis Darby, chief executive of the Canadian Manufacturers and Exporters, said the death of NAFTA is “probably our worst nightmare.”

The fifth round is scheduled to officially begin next Friday, Nov. 17, in Mexico City, with some additional talks in the two days prior. .

Read more:

Another Trump poison pill for NAFTA? Ottawa slams demand for 50% U.S. content in cars

Top Trump official says U.S. isn’t offering ‘anything’ to Canada in exchange for NAFTA demands

Ted Cruz warns of ‘profound damage’ to U.S. economy if Trump kills NAFTA

Canada 'prepared for the worst' amid squabbles over NAFTA, Freeland says .
Despite making some progress on "bread and butter" items, Foreign Affairs Minister Chrystia Freeland said differences remain between Canada and the U.S. on a number of key chapters of North American Free Trade Agreement (NAFTA). Speaking to reporters as the fifth round of negotiations concluded in Mexico City, the Toronto-area minister said "significant" sticking points include the U.S. push to change the rules of origin — which could be detrimental to the Canadian auto industry — and demands for a five-year sunset clause in the deal.

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