Monday, September 25 2017

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NAFTA talks get down to business amid Trump threats

Update: September, 01/2017 - 14:00

MEXICO CITY The US, Mexico and Canada dive into the details of revamping the North American Free Trade Agreement at a second round of talks Friday, amid threats from President Donald Trump to axe the deal.

After setting an ambitious "accelerated" calendar during the first round -- held in Washington from August 16 to 20 -- negotiators will now begin the nitty gritty business of modernizing the 1,700-page deal at five days of talks in Mexico City.

Trump has doubled down on his anti-NAFTA rhetoric in the build-up to the second round, saying Mexico was "being difficult" and that the US would "end up probably terminating" the deal, which he says has been disastrous for American industry and jobs.

But Mexico, which sends 80 percent of its exports to the United States, has dismissed Trump’s threats as posturing.

"President Trump is negotiating. He’s a negotiator with a peculiar style, a well-known style about which he has even published books," Mexican Foreign Minister Luis Videgaray said last week.

Trump himself has sent mixed signals about the deal.

On Thursday, he and Canadian Prime Minister Justin Trudeau spoke on the phone and "stressed their hope to reach an agreement by the end of this year," according to the White House.

Most experts now say NAFTA is likely to survive with modest changes -- though with Trump, nothing is certain, they warn.

The Republican president may ultimately have little room to maneuver.

Some 14 million US jobs depend on trade with Mexico and Canada, according to the US Chamber of Commerce.

Workers protest ’sell-out’

Instituted in 1994, NAFTA eliminated most tariffs across a region representing some 28 percent of the global economy.

To supporters, it has been instrumental in creating tightly integrated supply chains that ensured North America’s competitiveness at a time of Asia’s rise as an economic power.

To opponents, it is synonymous with the dirty word of globalisation and the ills they say it has wrought -- the decline of American manufacturing might, to some; to others, multi-national corporations’ drive for ever-cheaper workers and ever-lower labor standards.

Mexican workers plan to protest Friday against what they call their government’s sell-out to "neoliberalism."

Negotiators are rushing to reach a deal before the process gets caught up in campaigning for Mexico’s July 2018 presidential elections -- where a leftist populist, Andres Manuel Lopez Obrador, leads in the polls -- and the November 2018 US midterms.

Even proponents admit the deal, signed before the rise of cell phones and the internet, is ripe for an update.

But there are numerous touchy subjects, including US demands to scrap NAFTA’s dispute resolution mechanism and change the rules of origin for the auto sector to require a certain percentage of cars’ components to be built in the United States in order to remain duty-free.

Trump is also fixated on slashing the United States’s US$64 billion trade deficit with Mexico -- though economists say macroeconomics, not NAFTA, is to blame if the US consumes more than it produces.

Mexico will face pressure to overhaul its labor laws and deliver wage increases to factory workers who make an average $2.30 an hour – about one-tenth the average factory wage in the US.

The US trade balance with Canada is more even, but that relationship also has points of tension in some sectors, including dairy products, wine and grains. AFP

 

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