Nafta Negotiators Signal Progress on Thorny Auto Content Rules
March 22 2018 - 05:59AM
Dow Jones News
By Paul Vieira and William Mauldin
American, Canadian and Mexican officials are signaling they have
cleared a roadblock on auto-industry issues that have been some of
the thorniest in talks to overhaul the North American Free Trade
Agreement.
U.S. Trade Representative Robert Lighthizer struck a
conciliatory tone on Wednesday in testimony before Congress on the
auto proposal, which includes the U.S. demand that a revised Nafta
require light vehicles to contain 50% U.S. content to cross U.S.
borders duty-free.
Mr. Lighthizer told members of the House Ways and Means
Committee the U.S. auto proposal -- widely seen as the most
contentious issue in the negotiations -- is meant to draw more
manufacturing jobs back to the U.S., especially from Mexico. He
added Canada likely has a similar objective, since its
manufacturing sector has lost capacity to lower-cost jurisdictions
such as Mexico.
"Our hope is we get something that some of the large
manufacturers will find useful," Mr. Lighthizer said. As for talks
among the three Nafta countries on autos, "we are trying to work
our way through that," he said. "And I think we are in a position
where we are starting to converge."
A breakthrough on autos could put the parties on track to reach
a deal as early as next month, people familiar with the talks say,
before a likely stall in the run-up to Mexican elections in July
and U.S. midterm elections in November.
On Tuesday, Canada's ambassador to the U.S., David MacNaughton,
told reporters in Washington that U.S. officials appeared to have
softened their approach on auto-content rules.
"They put some interesting ideas on the table...which were
actually quite creative. To which we sort of said, 'Yeah, we can
work with that, '" Mr. MacNaughton said in remarks to the Canadian
Press news agency, confirmed by the Canadian embassy.
"Did we get to somewhere where you could shake hands and say,
'We've got a deal?'" he said. "Absolutely not. But I took it as
being a positive thing that they had another way of getting at that
issue."
Mr. MacNaughton said the ideas build on proposals Canadian
officials presented in January to broaden the definition of what
could be counted toward U.S. content, including items such as
software, technological components, and raw materials like steel.
He also said the recent American proposals could help the U.S.
achieve its goal of safeguarding auto production there, potentially
without a strict American-made content requirement for every
car.
A senior Mexico official this week also pointed to a more
compromising tone on the auto issue, saying the parties were
weighing proposals that don't necessarily require national content.
Mexico's Economy Minister Ildefonso Guajardo plans to meet with Mr.
Lighthizer before Easter and ahead of the next round of talks,
tentatively scheduled for April 8, one Mexican official said.
Mr. Guajardo said last week that rules of origin for the
automotive sector would have to change in the renegotiation of
Nafta. Current rules aren't sustainable, he said, as they were
defined nearly 26 years ago based on 1992 model cars.
Parties involved in the talks have expressed concerns that
Mexico's presidential elections in July could alter the pace of
negotiations.
At the end of the latest round of Nafta talks in Mexico earlier
this month, Mr. Lighthizer said officials from the three countries
had "a month or a month and a half or something" to get an
agreement in principle. Mr. Guajardo said last week that the three
countries need to reach a deal by the end of April, or they might
extend talks until late 2018 because of the Mexican and U.S.
votes.
Leftist nationalist Andrés Manuel López Obrador, the
presidential candidate who currently leads Mexican polls by a wide
margin, warned on Tuesday that negotiations shouldn't conclude
before July's election. He named a former World Bank economist who
once represented Mexico at the World Trade Organization to lead the
country's Nafta negotiating team should he win the election.
The Trump administration might also want a quick end to the
Nafta talks in view of its coming announcement on trade actions
against China, according to one trade analyst.
The Trump administration "will need all its trade resources on
China and not on fighting North America," said Eric Miller, global
fellow at the Washington-based Wilson Center.
--Santiago Pérez contributed to this article.
(END) Dow Jones Newswires
March 22, 2018 05:44 ET (09:44 GMT)
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