Critical Update – Critical Update – Critical Update
Those who are watching the NAFTA negotiations must pay close attention to the activity in the past 36 hours. There is a key video at the bottom. First the backdrop:
As most are aware the NAFTA fatal flaw, the “loophole”, surrounds Mexico and Canada structuring their economic manufacturing policy -and trade deals- through the exploitation of a back-door into the U.S. Market. Understanding this key issue is paramount to understanding President Trump’s approach therein.
Remove the NAFTA “loophole” and there is no longer an incentive for U.S. manufacturers to locate their operations in Mexico or Canada. However, the removal of this loophole also means China, ASEAN nations and the EU lose the same incentive.
There have been hundreds of billions of previous investment by multinational corporations in Mexico and Canada. Every dollar spent was intended to continue this exploitation.
Then came Trump.
In terms of investment size and scale of manufacturing, the auto-sector is perhaps the primary industry attempting to position themselves to avoid any reversal of the NAFTA scheme; and it is a self-interested economic scheme. In the short term there are billions at stake; in the longer term there are trillions within the equation.
U.S. Trade Representative Robert Lighthizer is attempting to close the loophole. If he is not successful, the likelihood of President Trump walking away from NAFTA is almost certain. Canada and Mexico are fighting to retain the loophole; they have built their trade and economic model upon it for the past three decades.
Canada and Mexico are fighting to keep importing Asian and EU components into their assembly facilities – to assemble and ship into the U.S. market, without tariffs etc.
Knowing the U.S. Chamber of Commerce is on the side of Canada and Mexico, yesterday Canadian Foreign Minister Chrystia Freeland went to see Speaker of the House Paul Ryan -an ally/benefactor of the CoC- to make direct inquiries about how the legislative timing of a renegotiated NAFTA trade deal would flow through the U.S. congress. The questions surround Trade Promotion Authority (TPA). [Thankfully Paul Ryan is retiring]
According to Bloomberg reporting:
Paul Ryan says he needs notice of a Nafta deal by May 17 if the current Congress is going to be able to vote on it, suggesting talks are pushing up against the constraints of American trade law.
The House Speaker, in remarks delivered Wednesday in Washington, said U.S. Trade Promotion Authority regulations mean next week is a deadline for the Trump administration if it wants to pass a new North American Free Trade Agreement before a new Congress is sworn in.
“As the author of TPA, I can tell you, we have to have the paper — not just an agreement, we have to have the paper — from USTR by May 17 for us to vote on it this year, in December, in the lame duck,” he said at an event hosted by the Ripon Society, a Republican policy group, according to video posted online Thursday.
Ryan was referring to the next step of Nafta talks, according to spokeswoman Ashlee Strong. If a deal is reached, the Trump administration would send a letter to Congress giving 90 days notice of its intent to sign a deal and text of a deal must be published 30 days after that. “This is not a statutory deadline, but a timeline and calendar deadline,” Strong said by email.
Negotiators are working to meet that goal, but they won’t sacrifice quality for timing, Mexican Economy Minister Ildefonso Guajardo told reporters on Friday morning outside the U.S. Trade Representative’s office in Washington, where talks are taking place. (read more)
It is presumed, this is the same message Paul Ryan delivered to Chrystia Freeland.
So with all of this carefully in mind, today President Trump meets with the key stakeholders from the auto-sector.
Remember, these corporations have invested billions during the past three decades to exploit the NAFTA (Can/Mex) benefits. Their collective position, CURRENTLY, is antithetical to President Trump’s America-First policy.
These discussions, and the ramifications, contain billions of billions of investment decision-making. President Trump wants these specific corporations to reverse their previous course of action; Trump wants them to change behavior; Trump wants the jobs and manufacturing back in the U.S. Watch and Listen closely: