Looks Like NAFTA Renegotiations Aren’t Happening This Year



Governance is one hell of a slippery fish. While you want your elected officials to assist in helping the nation evolve with an ever-changing society, you don’t want a deluge of contradictory and ill-planned laws mucking things up. That’s why the best progress is carefully measured and negotiated. But something has to happen eventually or you begin wondering what we (and the various lobbies) are paying these dingbats the big bucks for.

For example, the North American Free Trade Agreement looks like it’s about to be abandoned until sometime after 2019. After negotiations missed numerous self-imposed deadlines, U.S. House Speaker Paul Ryan said Congress needed a notice of intent to sign by roughly May 17th if anything was to be finalized for 2018. That date came and went. Now, everyone appears to have thrown their hands up, with practically every country on the planet currently considering retaliatory tariffs against the United States. 

U.S. President Donald Trump’s new import fees on steel and aluminum haven’t gone over particularly well. Automakers are considering making changes to cope, as well as preparing themselves for the possibility of new automotive tariffs — which are also threatened. The president’s trade decisions appear to have slammed the door squarely on the head of nations hoping to renegotiate NAFTA before the sun burns out.

Last week, Canadian Prime Minister Justin Trudeau began expressing frustrations with the U.S. “Let me be clear: These tariffs are totally unacceptable,” Trudeau said at a press conference on Thursday.

Trudeau followed up a few days later by suggesting Trump’s claim that the United States’ new tariffs are being considered because of national security concerns was an affront to the two countries’ longstanding relationship. “The idea that, you know, our soldiers who had fought and died together on the beaches of World War II and the mountains of Afghanistan, and have stood shoulder to shoulder in some of the most difficult places in the world, that are always there for each other, somehow — this is insulting to that,” he explained to NBC.

Canada, which is the largest exporter of steel to the U.S., has already announced retaliatory tariffs. Officials are practically begging for revenge at this point, which is a common theme in Europe, too. Trudeau, however, was careful to mention he was upset with the U.S. leadership and not its citizenry.

Meanwhile, Mexico is gearing up for next month’s presidential election — which could bring big changes. As Enrique Pena Nieto is not eligible for reelection, there will be someone new at the helm when NAFTA negotiations resume in earnest. Leftist politician Andres Manuel Lopez Obrador is the current frontrunner and his placement, as well as the probable shakeup in the Mexican Senate, could severely alter the tone of future trade talks.

Of course, the United States is having its own elections this November — and that’s the main reason the country has essentially given up taking NAFTA seriously until 2019. It’s campaigning season. However, even if none of the above issues were present, there is no guarantee that trade negotiations would have enjoyed smoother sailing.

Numerous proposals from the United States have proven a non-starter with Mexico and Canada. Automotive content requirement rules, now scaled back to appease partner countries, have been a constant sore spot and Mexico refuses to entertain some of the more ambitious employment regulations suggested by the North. Trade talks were never progressing in a way anyone would describe as favorably.

As if that wasn’t bad enough, Trump recently mentioned it might be better to simply end three-way talks on NAFTA and deal with Canada and Mexico individually. “He is very seriously contemplating kind of a shift in the NAFTA negotiations. His preference now, and he asked me to convey this, is to actually negotiate with Mexico and Canada separately,” Larry Kudlow, the White House’s chief economic adviser, said on Fox News Tuesday morning. “He prefers bilateral negotiations and he’s looking at two, much different countries.”

According to The New York Times, numerous senators have come out to urge the president to stay the course with NAFTA and find one universal agreement all countries can live with. It also referenced survey of chief executive officers, released Tuesday morning by Business Roundtable, that showed the majority are fearful of administration’s current trade policy. The very real prospect of economic revenge from other countries as trade tensions escalate pose a substantial risk to their businesses — and among those with the most to lose is the automotive industry.

[Image: NAFTA Secretariat]