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Trump says open to bilateral Canada, Mexico pacts if NAFTA talks fail

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U.S. Commerce Secretary Wilbur Ross, one of Trump’s top trade advisers, downplayed the chances that a NAFTA termination would become necessary.

“We don’t hope it will, we don’t desire that it will, we don’t believe that it will, but it is at least a conceptual possibility as we go forward,” Ross said.

But U.S. and Mexican corporate chief executives gathered in Mexico City said they would be better off with no NAFTA than be saddled with a “bad agreement.”

AGGRESSIVE PROPOSALS

Trade experts said the NAFTA talks were likely to stall in the face of aggressive U.S. attempts to sharply increase content requirements for autos and auto parts.

People briefed on U.S. proposals to be presented this week said Washington was seeking to sharply lift North American content threshold in car manufacturing.

The proposals call for North American content overall to rise to 85 percent from the current 62.5 percent. In addition, the United States wants to add a new 50 percent U.S.-specific content requirement, something that was not in the earlier agreements.

“These will be met with widespread opposition from Canada and Mexico. I think it’s just a bridge too far,” said Wendy Cutler, the Asia Society’s Washington policy director and former chief U.S. negotiator for the Trans-Pacific Partnership trade deal canceled by Trump.

The U.S. side sees strengthening the rules of origin for the auto industry as a way to bring back some auto parts production, including electronics, from Asia. But Mexico strongly opposes a U.S.-specific content requirement, which would limit the growth of its own car industry.

The difficult issue of rules of origin will be addressed mostly at the end of the current talks, according to a schedule obtained by Reuters. The negotiations were extended on Wednesday by two days to Oct 17.

Other U.S. proposals opposed by Canada, Mexico and U.S. business interests include the five-year sunset provision, radical changes to NAFTA’s dispute arbitration systems, changes to intellectual property provisions and new protections for U.S. seasonal produce growers.

U.S. Trade Representative Robert Lighthizer said on Wednesday the three nations had completed their negotiations on company competition policy, reaching an agreement that goes beyond previous U.S. trade deals to ensure “certain rights and transparency under each nation’s competition laws.”

Reuters
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