Canada, Mexico to query U.S. auto content material calls for at NAFTA talks

MEXICO CITY (Reuters) – Canada and Mexico is not going to make counterproposals to U.S. calls for for more durable NAFTA automotive content material guidelines however as a substitute will provide rebuttals and pepper American negotiators with technical questions on Monday, individuals acquainted with the talks mentioned.

A NAFTA banner is seen in the course of the fifth spherical of NAFTA talks involving the USA, Mexico and Canada, in Mexico Metropolis, Mexico, November 19, 2017. REUTERS/Edgard Garrido

Canada will make a presentation arguing U.S. calls for would trigger critical injury to U.S. in addition to North American automotive manufacturing, a Canadian supply with information of the negotiations mentioned.

The rebuttal is predicted to come back on Monday as negotiators resume discussions on automotive guidelines of origin within the fifth spherical of talks to replace the 23-year-old North American Free Commerce Settlement between the USA, Canada and Mexico.

The Trump administration final month surprised its NAFTA companions by unveiling calls for that half of the worth content material of all North American-built autos be produced in the USA and that the regional automobile content material requirement be sharply elevated to 85 p.c from the present 62.5 p.c.

The calls for are geared toward assembly U.S. President Donald Trump’s NAFTA targets of stemming the movement of U.S. carmaking jobs to low-wage Mexico and reversing a $64 billion U.S. commerce deficit with its southern neighbor.

“By way of the automotive sector, the USA´ proposal is insane,” mentioned a Mexican auto business consultant with information of the talks. “You can’t counter-propose such insanity.”

The Canadian negotiating group’s presentation will “present details about how the U.S. guidelines of origin proposal for autos would injury the continental business generally and the USA specifically,” the Canadian supply mentioned.

“In the event you transfer the content material requirement to 80 p.c, and even to a quantity decrease than that, it’s going to hit the provision chains. You’d then need to take care of probably ill-equipped suppliers which are possibly dearer,” the supply added.

Flags are pictured in the course of the fifth spherical of NAFTA talks involving the USA, Mexico and Canada, in Mexico Metropolis, Mexico, November 19, 2017. REUTERS/Edgard Garrido

A spokeswoman for the U.S. Commerce Consultant’s workplace on Sunday declined to touch upon the talks.

Flavio Volpe, president of Canada’s Automotive Components Producers Affiliation, additionally mentioned Canada and Mexico would attempt to persuade U.S. officers that the proposals would injury North American competitiveness and result in fewer auto meeting and elements jobs on the continent.

Volpe advised Reuters that his group has been briefing Canadian negotiators on the consequences of the U.S. proposals. Its evaluation discovered that even when some meeting operations are returned to the USA, these job positive factors shall be greater than offset by elements manufacturing shifting to Asia and different low-cost manufacturing areas.

Many automotive producers and elements makers will merely forego NAFTA free-trade advantages and pay the two.5 p.c U.S. tariff on many parts, he added.

His U.S. counterpart, the Motor and Gear Producers Affiliation, final month unveiled a research exhibiting that the USA would lose as much as 24,000 auto elements manufacturing jobs from greater NAFTA content material necessities and as much as 50,000 if NAFTA is terminated.

The Mexican auto business consultant mentioned the nation’s negotiators would probably ask extra technical questions in regards to the U.S. automotive content material calls for throughout discussions on Monday and Tuesday. The business wouldn’t again down from its opposition to the U.S. proposal, he added.

One other supply near the negotiations mentioned Mexico and Canada contemplate the U.S. proposal “unviable” and disagree with the idea.

“So we aren’t in a state of affairs of with the ability to go over numbers. It isn’t about analyzing the figures that they placed on the desk and us returning with different figures,” the supply mentioned.

Extra reporting by David Ljunggren and Anthony Esposito, writing by David Lawder; Modifying by Cynthia Osterman

Our Requirements:The Thomson Reuters Trust Principles.

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