NAFTA partners agree on update

on Aug3

Colin Bird: “For Canada, it is important that we simplify and modernize the Rules of Origin, we avoid rules that are so complicated and marginal that they actually encourage production offshore.” Photo credit: Greg Horvath

TRAVERSE CITY, Mich. — Trade representatives from Canada and Mexico agree with the Trump administration’s assertion that the two-decade-old North American Free Trade Agreement should be renegotiated.

But neither agree that NAFTA has been what President Donald Trump called “a job killer.”

Wednesday at the CAR Management Briefing Seminars, Colin Bird, minister-counselor, trade and economic policy assigned to the Canadian Embassy, and Francisco Sandoval-Saqui, a Mexican trade official working in the Ministry of the Economy, laid out their country’s agendas for NAFTA trade talks that are scheduled to begin Aug. 16 in Washington.

Bird said Canada’s chief goal in the negotiations is to update the treaty so the United States, Canada and Mexico emerge with an improved framework that makes the three countries even more competitive with Europe and Asia.

Specifically, he said, the treaty’s Rules of Origin need to be modernized. Rules of Origin deals with parts that go into cars that were not made in the United States, Canada or Mexico. Non-NAFTA parts expose vehicles to tariffs.

“For Canada, it is important that we simplify and modernize the Rules of Origin, we avoid rules that are so complicated and marginal that they actually encourage production offshore,” Bird said. “There are over 300 pages on Rules of Origin in the existing NAFTA, and that seems like a bit of excessive red tape.”

Other topics Canada will raise include:

• Doing a better job getting small- and medium-size companies to trade across our borders.

• Providing greater support to female entrepreneurs and doing a better job of acknowledging the economic aspirations of our indigenous communities.

• Ensuring that workers throughout North America see their interests reflected in the revised agreement.

Bird also said Canada wants the modernized NAFTA treaty to go beyond the existing framework.

“We have an opportunity to look at our shared transportation infrastructure, improve our border crossings and avoid needless regulatory differences that have nothing to do with health and safety,” Bird said. “Modernizing NAFTA goes beyond a drafting exercise, and the level of high-level political attention we have on NAFTA right now is too big an opportunity; we must not squander it.”

Sandoval-Saqui said Mexico’s priority in the negotiations is to make trade easier across the three borders. He said regional competitiveness can be improved by better integrating energy sectors, reducing tariffs and improving efficiencies at U.S., Mexican and Canadian borders.

“We want to look at how to reduce friction at the borders and remove regulatory framework that is not needed. That is the challenge and opportunity to do that,” he said.

Sandoval-Saqui said NAFTA had succeeded in integrating the supply chains in many industries, including autos. And he disputed the notion that Mexico has an unfair advantage, even though it runs a trade surplus in automobiles and parts with the United States.

The United States last year sent $19 billion worth of auto parts to Mexico. Autos made in Mexico used an average of $5,500 per vehicle worth of parts made in the United States, while vehicles made in the U.S. used $3,800 per vehicle worth of Mexican-made parts.

Said Sandoval-Saqui: “Mexican auto parts are key for U.S. auto industry competitiveness.”

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