After an agonizing seven days of mutual hostilities, the fourth round of the NAFTA renegotiation process came to a close on Tuesday, October 17th and it should by now be obvious, to even the most optimistic observer, that Donald Trump and his chief negotiator, Robert Lighthizer are intent on setting the stage for a withdrawal of the U.S. from the North American Free Trade Agreement – possibly during the upcoming 5th Round in Mexico.
To that end, the U.S. team shocked Mexico and Canada by spontaneously confronting the negotiators with a series of six totally unacceptable demands which certainly are a deal-breaker for the next three remaining rounds:
1. The U.S. demanded a so-called “sunset clause” which would force the U.S., Mexico and Canada to renegotiate NAFTA every five years. There is no such clause in any free trade agreement anywhere in the world because it would make long-term business planning impossible, since every five years the treaty could vanish because of just one party’s dissatisfaction with it.
2. On Thursday, the U.S. dropped another bombshell by demanding that the present rules of origin which require that 62.5% of motor vehicle parts be manufactured in North America be changed to 85% and of that percentage, half will have to be manufactured exclusively in the United States. That would do catastrophic damage to the automotive industry in Mexico generally and to Puebla in particular.
3. On Friday they added one more: 100% of all steel, aluminum and copper used in the automotive industry of all three countries must be manufactured in the U.S.A.!
4. On Saturday, they brought up the elimination of Article 19 of NAFTA again and insisted on the establishment of a special U.S.-based court system to deal with disputes under NAFTA. Canada refused to even discuss the matter!
5. Then, to rub even more salt into the already inflicted wounds, Lighthizer, who has obviously succumbed to the pressure of the U.S. trucking lobby, insisted on the complete elimination of the NAFTA article which permits free access and operation of Mexican trucks in U.S. territory.
6. Finally, on Monday, Trump’s team warned that under any new version of NAFTA, Mexican and Canadian access to U.S. Government Procurement Contracts would have to be severely reduced.
We must prepare ourselves for an increasingly uncertain future…