U.S. Trade Representative Robert Lighthizer, left, shakes hands with Canadian Foreign Affairs Minister Chrystia Freeland, accompanied by Mexico’s Secretary of Economy Ildefonso Guajardo Villarreal, after they spoke at a news conference on Wednesday at the start of NAFTA renegotiations in Washington. (AP Photo/Jacquelyn Martin)

Autos likely high on U.S. NAFTA agenda

Early indications suggest automobiles will emerge as first priority on Day 1 of NAFTA negotiations

WASHINGTON — Early indications are pointing to a potential No. 1 priority for the U.S. in a renegotiated NAFTA: automobiles.

It’s the specific issue that was mentioned first, at greatest length, and in most detail by Donald Trump’s trade czar as talks got underway Wednesday.

Robert Lighthizer pointed to the carnage in the manufacturing sector as the reason so many Americans view NAFTA as a failed agreement.

“Thousands of American factory workers have lost their jobs because of these provisions,” Lighthizer said in his opening remarks.

He cited priorities for the sector, designed to boost production of parts in North America, and in the United States.

Industry members are warning Lighthizer to handle the matter with care as the details are complicated, and any wrong moves could either drive up vehicle prices.

There’s also a risk that changes could make North American producers less competitive, or even force them to just ignore the new rules and simply pay a tariff that would be passed along to consumers.

Lighthizer listed four priorities for the sector:

— A higher North American content requirement to avoid a tariff. The current rule of origin calls for 62.5 per cent of a car’s parts to be made in North America.

— Substantial U.S. content in cars. It was unclear whether he was advocating a new, specific requirement for U.S. content — a move that would surely be controversial — or whether he was simply stating that the desired changes should positively affect the region, with more cars being made in the U.S.

— Stricter monitoring to make sure companies comply with the rules of origin. Lighthizer said country of origin “should be verified, not deemed.” Labour provisions should be included in the agreement and be as strong as possible.

— Tougher labour standards. Some insiders in Canada and the U.S. suggest better worker conditions in Mexico, and more pay, would not only be good for Mexicans but also for making non-Mexican production more cost-effective and preserving vehicle production in Canada and the U.S.

A Canadian auto-industry representative at the talks said he’s not worried by what he heard: “There’s no anxiety about it with us,” said Flavio Volpe, president of the Automotive Parts Manufacturers’ Association.

For example, Volpe interpreted Lighthizer’s words to mean that he’s hoping for more production in the U.S. as a spinoff effect of a stronger North American industry, not as a demand that plants move there from other countries.

But he urged negotiators to be very careful when touching the current rules. He warned of ample possibilities for unintended consequences.

“It’s not simple,” Volpe said. ”If you make it too onerous, does a company or supplier say, ‘Forget about compliance. I’ll just pay the tariff.’”

That means production would actually shift abroad: companies would simply pay the tariffs, ranging from 2.5 to 6.1 per cent, as a cheaper alternative to following complicated new rules.

It’s also risky to try requiring companies to produce certain products at home, Volpe added: some industries that produce certain types of electronics for automobiles simply don’t exist in North America.

Finally, damaging Mexican competitiveness can boomerang on companies from the other countries.

He said Canadian auto-parts companies have 43,000 employees in Mexico.

Alexander Panetta, The Canadian Press

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Synchronized Skating National Qualifying Event hosted in Red Deer Alberta Jan. 25th-26th

The 2020 Mountain Regional Synchronized Skating Championships are part of the National qualifying system

The Stettler ATOM female team will be having a Hockey Fights Hunger Food Drive Feb. 8th

Drop off locations will include Canadian Tire, No Frills and Sobeys from 10 a.m. to 4 p.m.

County council approves “challenging budget”

Provincial government cuts affect County’s revenue sources

Stettler’s Big Brothers Big Sisters has plenty of events lined up for the first part of 2020

January is Mentoring Month across Canada and throughout North America

VIDEO: WHO says China virus not global health emergency

The decision came after Chinese authorities moved to lock down three cities on Thursday

Blackfalds RCMP investigate fatal motor vehicle collision

Collision occurred at the intersection of Highway 11 and Burnt Lake Trail

Former Mountie, sports coach convicted of sex abuse in B.C. granted day parole

Alan Davidson was sentenced to almost six years for abusing seven boys in the late 1970s and early 1990s

Here’s what Canada is doing to stop the coronavirus from getting in

Health officials are monitoring multiple possible cases in Canada

Alberta privacy watchdog investigates ID scans at liquor stores

Alcanna Ltd., based in Edmonton, runs Liquor Depot, Wine and Beyond and Nova Cannabis stores

Survey finds support among Canadians for broader assisted-dying law

The survey was conducted Jan. 17 to 21 among 1,552 Canadians eligible to vote

New nasal spray launched in Canada to combat hypoglycemic shock in diabetics

Baqsimi is a nasal spray contains three milligrams of glucagon

Canadian public health agencies ramping up preparations in response to new virus

Health officials have said there are no confirmed cases of the emerging coronavirus in Canada

‘Naughty boy’: Monty Python star Terry Jones dies at 77

The comedian has been suffering from a rare form of dementia

Most Read