Negotiations on the North American Free Trade Agreement are on the ropes because President Trump's top negotiator, Robert Lighthizer, "is playing such extreme hardball with the Canadians and Mexicans . . . that sources close to the process say there's no chance of a compromise solution unless he changes tactics," Jonathan Swan reports for Axios. Withdrawing from NAFTA could cause big problems for farmers, many of whom voted for Trump. A host of lawmakers are begging Trump to stick with it for the sake of the rural farmers who depend on it.
The automotive industry could lose out too, which could hurt Republicans since most of the top 10 states for auto manufacturing voted for Trump. A new study says up to 50,000 auto parts jobs could be lost if the U.S. ditches NAFTA completely, and up to 24,000 jobs could be lost if the U.S. keeps NAFTA but pushes through stringent Made in America auto manufacturing requirements.
Trump wants tariff-free cars crossing the U.S. border for manufacturing to be made of at least 50 percent American parts. "That's viewed as a non-starter by virtually every party involved in automobile manufacture," according to The Canadian Press, which goes on to detail the demands: "First, it requires all cars to include 85 percent North American content to avoid a tariff, up from the current 62.5 percent; 50 percent of a car’s content would have to come from the U.S.; and it would toughen the way content is calculated, with a list upgraded to include parts that didn’t exist in 1994 when NAFTA was originally implemented." All of this is an effort to reduce the trade deficit with Mexico for autos and auto parts, which reached $74 billion last year.
Jerry Dias, the spokesperson for Canadian auto workers' union Unifors, says the U.S. could not enforce such changes because companies would just ignore it. "All this argument about 50 percent, 70 percent, 85 percent, it means nothing as long as the U.S. has a 2.5 percent tariff. It’s like the emperor with no clothes,” he told The Canadian Press. "They can yell, scream, threaten, then people say, 'Okay, here – I’ll pay the 2.5 percent.'"
"With no trade incentive to manufacture in the United States other than to avoid the 25 percent truck tariff, more full vehicle production would migrate to low-cost countries such as China, auto experts say," David Lawder reports for Reuters.
Trump also wants a sunset clause that would cause NAFTA to dissolve five years from now unless all parties agree to extend it at that time.
American negotiations with South Korea for the KORUS trade deal aren't going so well either, and for much the same reason: hardball negotiation. But a poison pill to torpedo the deal may be the point. "Trump believes to his core that the deal is a scam," Swan writes. The negotiations matter, he says, because "Between NAFTA and KORUS you're talking more than $1 trillion in annual trade in goods and services. Withdrawal would do far more than simply roil the U.S. markets; it would profoundly alter U.S. alliances, test a crucial national security partnership in Asia, and could result in the election of a hard core leftist (and no friend to the USA) in Mexico.
The automotive industry could lose out too, which could hurt Republicans since most of the top 10 states for auto manufacturing voted for Trump. A new study says up to 50,000 auto parts jobs could be lost if the U.S. ditches NAFTA completely, and up to 24,000 jobs could be lost if the U.S. keeps NAFTA but pushes through stringent Made in America auto manufacturing requirements.
Trump wants tariff-free cars crossing the U.S. border for manufacturing to be made of at least 50 percent American parts. "That's viewed as a non-starter by virtually every party involved in automobile manufacture," according to The Canadian Press, which goes on to detail the demands: "First, it requires all cars to include 85 percent North American content to avoid a tariff, up from the current 62.5 percent; 50 percent of a car’s content would have to come from the U.S.; and it would toughen the way content is calculated, with a list upgraded to include parts that didn’t exist in 1994 when NAFTA was originally implemented." All of this is an effort to reduce the trade deficit with Mexico for autos and auto parts, which reached $74 billion last year.
Jerry Dias, the spokesperson for Canadian auto workers' union Unifors, says the U.S. could not enforce such changes because companies would just ignore it. "All this argument about 50 percent, 70 percent, 85 percent, it means nothing as long as the U.S. has a 2.5 percent tariff. It’s like the emperor with no clothes,” he told The Canadian Press. "They can yell, scream, threaten, then people say, 'Okay, here – I’ll pay the 2.5 percent.'"
"With no trade incentive to manufacture in the United States other than to avoid the 25 percent truck tariff, more full vehicle production would migrate to low-cost countries such as China, auto experts say," David Lawder reports for Reuters.
Trump also wants a sunset clause that would cause NAFTA to dissolve five years from now unless all parties agree to extend it at that time.
American negotiations with South Korea for the KORUS trade deal aren't going so well either, and for much the same reason: hardball negotiation. But a poison pill to torpedo the deal may be the point. "Trump believes to his core that the deal is a scam," Swan writes. The negotiations matter, he says, because "Between NAFTA and KORUS you're talking more than $1 trillion in annual trade in goods and services. Withdrawal would do far more than simply roil the U.S. markets; it would profoundly alter U.S. alliances, test a crucial national security partnership in Asia, and could result in the election of a hard core leftist (and no friend to the USA) in Mexico.
from The Rural Blog http://ift.tt/2yqLzf2 Hardline American demands put NAFTA and Korea negotiations on the ropes - Entrepreneur Generations
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