NAFTA Talks Likely to Go Past December, Analysts Say
NAFTA talks probably will extend past the U.S.’s hoped-for deadline of Dec. 31, as major differences among the three parties involved start to emerge and the U.S. lacks political direction on several fundamental issues, trade analysts said Sept. 5. The U.S. during the second round of renegotiations Sept. 1-5 in Mexico City floated domestic content requirements for automobiles under NAFTA, but didn’t put forth a definitive threshold, a trade lobbyist said. U.S. negotiators have bandied about the possibility of a 35 percent to 50 percent requirement for U.S. automobile content, and are likely to go to the third round in Ottawa with a more specific proposal, the lobbyist said.
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Absence of a benchmark for such a major area of negotiation clouds the NAFTA renegotiation timeline and increases the likelihood that talks will not conclude before the end of this year, the lobbyist said. “It’s one thing to float that you want something, but if you’re having a round, it behooves you to put a text on the table,” he said. “This thing’s going to be nowhere close to being wrapped up by Christmas.” The next best time to finish negotiations would be by April, when Mexican election season would threaten to subject NAFTA to intensified politics south of the border, the lobbyist said. But if the U.S. continues to push national rules of origin for automobiles, it could become a "long imbroglio" with potential pushes to set similar rules for products in other sectors, he said.
But Stimson Center distinguished fellow Bill Reinsch said the U.S.’s withholding of major proposals isn’t in itself contributing to any lag in negotiations, and said the “real problems” will arise when the U.S. makes formal proposals “that are unacceptable” to Canada or Mexico. “At that point, things will start [to] deteriorate and deadlines will be jeopardized,” Reinsch said. Once the U.S. makes a formal proposal of specific national rule of origin requirements for automobiles, it could be an unpalatable one, he said, and spark resistance. Canadian and Mexican resistance to a U.S. push for an $800 NAFTA-wide de minimis threshold could also have an impact -- likely lesser than for national rules of origin -- on the negotiations timeline, Reinsch said. Canadian business stakeholders are ratcheting up pressure on their government to resist a de minimis increase, he said. “Apparently they fear it will allow Amazon et.al. to make inroads at the expense of their retailers,” Reinsch said. The Office of the U.S. Trade Representative didn’t immediately comment.