Let’s be crystal clear about this. NAFTA is a sham. What it really sets out to do is to funnel Chinese goods into the US with no tariffs via Canada and Mexico. Additionally, the Canadians and Mexicans have no desire to increase their domestic manufacturing base. They are content to act as middlemen and brokers for the Chinese… at the expense of their populations and ours.
President Trump… Get us out.
Sundance does a nice job of outlining the specifics below.
After three days of discussions between U.S Trade Representative Robert Lighthizer, Canadian Foreign Minister Chrystia Freeland and Mexican Economy Minister Ildefonso Guajardo they were not able to develop any consensus on the major issues within the North American Free Trade Agreement, NAFTA.
The likely outcome of the upcoming Mexican national election on July 1st brought the principals together for non-scheduled talks, as U.S. President Trump instructed Ambassador Lighthizer to explore whether the three nations could find common ground on the ‘big picture’ issues behind the largest schism. The auto sector and rules of origin is the epicenter of the biggest difference between the U.S., Mexico and Canada.
The U.S. auto-sector NAFTA position is that North American content of vehicles made in NAFTA countries be increased to 85 percent from 62.5 percent. The Canadian and Mexican position is for lower North American content.
Canada is not arguing for higher Canadian content. Mexico is not arguing for higher Mexican content… Instead both Canada and Mexico are arguing for higher imported content (China and Asia). Honestly, I cannot fathom why more people don’t see the inherent ridiculousness of NAFTA against the reality of Canada and Mexico arguing for more Chinese imports.
The reason Can/Mex are arguing for more imported material content is because both of their trade economies exploit the NAFTA loophole that allows European and Asian parts to be shipped into Can/Mex, assembled, and shipped into the U.S. market without duty.
It’s bizarre; yet this is the reality.
NAFTA is so completely flawed, it is against Canada and Mexico’s financial interest for them to agree to a North American trade agreement that is structured around North American trade.
When you ask a pro-NAFTA advocate why Canada and Mexico are arguing for less Canadian and Mexican manufacturing in their NAFTA position the advocate cannot answer with any intelligence…. because their pro-NAFTA entire premise is ridiculous, and based on structural falsehoods. Very frustrating.
Depending on which ideological broadcast or print media you review, there is a massive disconnect in their projected framework of optimism that a deal can be reached. Canadian media are desperate to find hope that any deal can be reached. Mexican media is ambivalent; and U.S. media is mostly driven by the position of multinational corporations who demand the exploitative nature of NAFTA be retained.
My gut, and the ongoing deep reviews of nuance therein, still lean heavily toward the inability of any deal to be possible because the underlying dynamic is so structurally flawed. It is against U.S. interests to stay in NAFTA. It is against Mexico and Canada’s interests to exit NAFTA. There is a massive amount of media manipulation between those polar opposite positions.