The somewhat vague list of United States objectives for the renegotiation of the North American Free Trade Agreement (NAFTA) tells the president of the Canadian Automotive Parts Manufacturers’ Association (APMA) that the Trump administration understands just how interconnected the industry is across the continent.
“From what I’ve seen from his language on automotive, there’s been a moderating of it. It could mean [U.S. President Donald Trump] now, through proper briefing and support, understands the American interest, which doesn’t end at the American border. Our interests are so intertwined,” Flavio Volpe said.
“The American consumer is disproportionately affected by the competitiveness of Canadian production. Americans buy the cars we make here. It’s in their interest to have a cost competitive environment.”
The APMA, federal government and several provincial politicians have spent months lobbying state senators and members of Congress, explaining how interconnected the auto industry is between Canada, Mexico and the United States. The idea was to get the United States to leave the auto portion of NAFTA largely untouched. Volpe thinks it worked to some extent.
The auto sector is not specifically mentioned in the list of objectives published by the U.S. government late Monday afternoon.
Abundance of caution
“I think our counterparts in the U.S. and the Canadian federal government and provinces have done a really good job in outreach to all the affected states,” Volpe said. “On the ground this works, so please let’s err on the side of caution.”
The list does, however, include four points about rules of origin, something that affects the North American auto industry.
Currently, 62.5 per cent of the makeup of vehicles and 60 per cent of automotive parts must be made within the NAFTA region to receive duty-free status in the United States, Canada and Mexico, the trio of countries.
“They don’t appear to have shown new cards,” Volpe said of the U.S. officials who drew up the list of objectives.
United States Commerce Secretary Wilbur Ross has called the current rules of origin obsolete and outdated and said they will be a major focus during renegotiations. He, the United States and unions in Canada and the United States want that percentage to be increased in hopes that it will create more manufacturing jobs in North America.
Striking a balance
Volpe said that negotiators on all sides “will have to take a very hard look at the rules that affect automotive trade.”
Overall, Volpe wasn’t surprised by anything in the document.
“This document says to me that this administration understands how important striking the right balance for automotive is,” he said. “They may eventually choose to take a hard position, but they’ll do it behind closed doors, like any good negotiator would.”
American law requires that the administration publish a list of its objectives entering trade negotiations. The law also requires the list be posted online 30 days in advance. With it published, NAFTA talks are expected to begin on or around Aug. 16.