Trump Administration Must Back Off on NAFTA Demands for Canada to Move Forward

Last updated on September 5th, 2018

Dozens of American lawmakers, primarily Republicans, have been urging the Trump administration to cool off on some of its North American Free Trade Agreement (NAFTA) demands. However, Canada is viewing this as a show of solidarity.

The fifth negotiating round for an update to the deal gets underway in Mexico on Friday. Meanwhile, the lobbying efforts of Canada continue in a “full court press,” as officials have been calling it. Many are predicting that the deal seems to fall apart completely anytime.

Several businesses and industry organizations in the US have already raised alarms over certain of more combative asks of President Donald Trump, including the new severe rules of origin for North American automobiles. The politicians are progressively joining the refrain.

On Wednesday, a letter to trade representative Robert Lighthizer gathered signatures from 57 Republicans and 15 Democrats in Congress. The letter says, “While we agree that (the North American Free Trade Agreement) should be updated to help our companies better address the challenges of the 21st century economy, it should not be terminated.”

Unfortunately, it appears that several U.S. proposals under discussion in the NAFTA negotiations, including the U.S. motor vehicle rule of origin proposal, would eliminate the competitive advantages provided to the U.S. auto industry under the current NAFTA rules — or lead to rejection by Canada and Mexico and the end of the agreement.”

The members of Congress argue that either the outcome would “adversely affect the U.S. auto industry, reducing sales, production, and exports and harming U.S. workers in the process.”

Some parts of the deal cannot move forward from the Canadian point of view, unless the Americans default on their hard-line positions.

With the ongoing situations, the initial push to conclude the deal by the end of this year almost looks impossible. It is expected that the talks might finish before presidential elections in Mexico next summer, and mid-term elections in the U.S. next fall. However, that will also happen if the talks will proceed, and none of the parties get irritated enough to simply walk away from the table.

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