NAFTA Updates

An 'agreement in principle' could not be reached at the Summit of the Americas earlier this month, but Vice President Pence and Commerce Secretary Wilbur Ross, who attended in place of President Trump, are hopeful about reaching a preliminary deal by the third week of May.

All parties seem eager to meet this deadline as US Trade Representative Robert Lighthizer meets with his Canadian and Mexican counter parts on Tuesday (4/24) in Washington DC. High ranking officials met Friday (4/20) and will continue through the weekend in preparation for the trilateral meeting. The 7th of 30 eventual chapters in the NAFTA agreement has just been completed.

The origin rules for auto parts remains a major sticking point in negotiations. This rule governs the percentage of vehicle content that must be made in NAFTA countries. Originally, the Trump administration wanted to raise that requirement from 62.5% to 85% and increase the amount built in the US but has 'significantly softened' their position. 

Former Commerce Secretary Carlos Gutierezz offered his predictions on an eventual NAFTA deal, saying that number will end up at 70%-75% for regional rules of origin (auto content coming from any of the three NAFTA nations rather than from US only). In addition, the proposed sunset provision requiring NAFTA renegotiation every five years will likely be changed to a recurring check-in.

Other negotiation speed bumps include government procurement, investor-state dispute settlement (ISDS), and dairy products. 

Meanwhile, elections that could be consequential for NAFTA  are quickly approaching; Mexico elects a new president on July 1, and US Midterm elections on November 6 could elect a Congress that makes NAFTA renegotiation difficult. 

Under the Trade Promotion Authority the White House must give Congress 90 days notice of its decision to sign the new agreement. 60 days before signing, a legal text of the agreement must be released (if anti-dumping and countervailing duty measures are changed by the deal, 180 days notice would be required instead). 

Other NAFTA and Trade news:

https://www.forbes.com/sites/phillevy/2018/04/17/is-there-still-time-for-a-nafta-deal/#1dd7ae8f3122

https://www.politico.com/story/2018/04/20/lighthizer-nafta-trump-trade-congress-539248

​​Contributions by Zack Tarhouni, PNWER Intern