Friday, 16 November, 2018

United States demands an end to Canada's supply management

US demands an end to Canada's supply management Canada's supply management under attack
Ellis Copeland | 17 October, 2017, 23:36

It governs how much of a auto has to be manufactured in North American to avoid import taxes in the three countries that make up NAFTA.

The Office of the U.S. Trade Representative did not respond to a request for comment.

Rules of origin will be negotiated in sessions Friday, Sunday and Monday during the fourth round of talks outside Washington, D.C. The auto sector has warned that a substantial change to rules of origin would upend supply chains and be costly for the industry.

The sources say Canadian negotiators are calling the demand "a non-starter".

The United States have addressed several issues of contention, including the auto parts, the dispute settlement mechanism and the rules to "Buy American" - a clause protectionist.

Lighthizer said he thought by now the sides would've agreed to issues including digital trade, telecommunications and anticorruption, and there's no indication of changes that would result in a reduction of the USA trade deficit. "However, higher requirements for North American content would actually incentivize manufacturers to cease trading under the agreement and instead simply pay the low USA most-favored nation tariff".

Negotiations have been going so badly that some pundits are saying the U.S.is depositing "poison pill" demands in hopes of having the talks collapse completely.

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"We couldn't accept it", the Mexican government source said Tuesday.

The next round of talks will take place in November in Mexico.

In essence, the US wants to track more auto parts, track them more closely and end up with a higher share of them coming from the three nations, the U.S.in particular.

Perhaps all of this was on the mind of Canadian Prime Minister Justin Trudeau as he met the president at the White House.

Mexican economist and financial analyst Luis Rubio said the greatest danger to Mexico if NAFTA is scrapped is loss of confidence in the nation as a place for investment.

Trade with the US could continue without NAFTA. The proposal would require 85 percent of every vehicle to be made in one of the three countries for the vehicle to qualify for tariff-free status, an increase from 62.5 percent. "The risk if NAFTA is ended won't be seen, at least initially, in foreign trade but in the ability of Mexico to attract foreign investment, and in the preservation of domestic confidence in the economy".

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