Canada, Mexico to question U.S. auto content demands at NAFTA talks

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MEXICO CITY (Reuters) – Canada and Mexico won’t make counterproposals to U.S. calls for for more durable NAFTA automotive content material guidelines however as a substitute will provide rebuttals and pepper American negotiators with technical questions on Monday, folks acquainted with the talks mentioned.

A NAFTA banner is seen through the fifth spherical of NAFTA talks involving the US, Mexico and Canada, in Mexico Metropolis, Mexico, November 19, 2017. REUTERS/Edgard Garrido

Canada will make a presentation arguing U.S. calls for would trigger severe injury to U.S. in addition to North American automotive manufacturing, a Canadian supply with data of the negotiations mentioned.

The rebuttal is predicted to return on Monday as negotiators resume discussions on automotive guidelines of origin within the fifth spherical of talks to replace the 23-year-old North American Free Commerce Settlement between the US, Canada and Mexico.

The Trump administration final month shocked its NAFTA companions by unveiling calls for that half of the worth content material of all North American-built autos be produced in the US and that the regional automobile content material requirement be sharply elevated to 85 % from the present 62.5 %.

The calls for are geared toward assembly U.S. President Donald Trump’s NAFTA targets of stemming the move of U.S. carmaking jobs to low-wage Mexico and reversing a $64 billion U.S. commerce deficit with its southern neighbor.

“When it comes to the automotive sector, the US´ proposal is insane,” mentioned a Mexican auto business consultant with data of the talks. “You can’t counter-propose such insanity.”

The Canadian negotiating group’s presentation will “present details about how the U.S. guidelines of origin proposal for autos would injury the continental business usually and the US specifically,” the Canadian supply mentioned.

“If you happen to transfer the content material requirement to 80 %, and even to a quantity decrease than that, it’ll hit the availability chains. You’ll then must take care of probably ill-equipped suppliers which are possibly dearer,” the supply added.

Flags are pictured through the fifth spherical of NAFTA talks involving the US, Mexico and Canada, in Mexico Metropolis, Mexico, November 19, 2017. REUTERS/Edgard Garrido

A spokeswoman for the U.S. Commerce Consultant’s workplace on Sunday declined to touch upon the talks.

Flavio Volpe, president of Canada’s Automotive Elements Producers Affiliation, additionally mentioned Canada and Mexico would attempt to persuade U.S. officers that the proposals would injury North American competitiveness and result in fewer auto meeting and elements jobs on the continent.

Volpe advised Reuters that his group has been briefing Canadian negotiators on the consequences of the U.S. proposals. Its evaluation discovered that even when some meeting operations are returned to the US, these job beneficial properties will likely be greater than offset by elements manufacturing transferring to Asia and different low-cost manufacturing areas.

Many automotive producers and elements makers will merely forego NAFTA free-trade advantages and pay the two.5 % U.S. tariff on many elements, he added.

His U.S. counterpart, the Motor and Gear Producers Affiliation, final month unveiled a research exhibiting that the US would lose as much as 24,000 auto elements manufacturing jobs from larger NAFTA content material necessities and as much as 50,000 if NAFTA is terminated.

The Mexican auto business consultant mentioned the nation’s negotiators would doubtless ask extra technical questions concerning the U.S. automotive content material calls for throughout discussions on Monday and Tuesday. The business wouldn’t again down from its opposition to the U.S. proposal, he added.

One other supply near the negotiations mentioned Mexico and Canada take into account the U.S. proposal “unviable” and disagree with the idea.

“So we aren’t in a scenario of having the ability to go over numbers. It isn’t about analyzing the figures that they placed on the desk and us returning with different figures,” the supply mentioned.

Extra reporting by David Ljunggren and Anthony Esposito, writing by David Lawder; Enhancing by Cynthia Osterman

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