U.S. Trade Representative Robert Lighthizer, left, shakes hands with Canadian Foreign Affairs Minister Chrystia Freeland, accompanied by Mexico’s Secretary of Economy Ildefonso Guajardo Villarreal, after they spoke at a news conference on Wednesday at the start of NAFTA renegotiations in Washington. (AP Photo/Jacquelyn Martin)

Autos likely high on U.S. NAFTA agenda

Early indications suggest automobiles will emerge as first priority on Day 1 of NAFTA negotiations

WASHINGTON — Early indications are pointing to a potential No. 1 priority for the U.S. in a renegotiated NAFTA: automobiles.

It’s the specific issue that was mentioned first, at greatest length, and in most detail by Donald Trump’s trade czar as talks got underway Wednesday.

Robert Lighthizer pointed to the carnage in the manufacturing sector as the reason so many Americans view NAFTA as a failed agreement.

“Thousands of American factory workers have lost their jobs because of these provisions,” Lighthizer said in his opening remarks.

He cited priorities for the sector, designed to boost production of parts in North America, and in the United States.

Industry members are warning Lighthizer to handle the matter with care as the details are complicated, and any wrong moves could either drive up vehicle prices.

There’s also a risk that changes could make North American producers less competitive, or even force them to just ignore the new rules and simply pay a tariff that would be passed along to consumers.

Lighthizer listed four priorities for the sector:

— A higher North American content requirement to avoid a tariff. The current rule of origin calls for 62.5 per cent of a car’s parts to be made in North America.

— Substantial U.S. content in cars. It was unclear whether he was advocating a new, specific requirement for U.S. content — a move that would surely be controversial — or whether he was simply stating that the desired changes should positively affect the region, with more cars being made in the U.S.

— Stricter monitoring to make sure companies comply with the rules of origin. Lighthizer said country of origin “should be verified, not deemed.” Labour provisions should be included in the agreement and be as strong as possible.

— Tougher labour standards. Some insiders in Canada and the U.S. suggest better worker conditions in Mexico, and more pay, would not only be good for Mexicans but also for making non-Mexican production more cost-effective and preserving vehicle production in Canada and the U.S.

A Canadian auto-industry representative at the talks said he’s not worried by what he heard: “There’s no anxiety about it with us,” said Flavio Volpe, president of the Automotive Parts Manufacturers’ Association.

For example, Volpe interpreted Lighthizer’s words to mean that he’s hoping for more production in the U.S. as a spinoff effect of a stronger North American industry, not as a demand that plants move there from other countries.

But he urged negotiators to be very careful when touching the current rules. He warned of ample possibilities for unintended consequences.

“It’s not simple,” Volpe said. ”If you make it too onerous, does a company or supplier say, ‘Forget about compliance. I’ll just pay the tariff.’”

That means production would actually shift abroad: companies would simply pay the tariffs, ranging from 2.5 to 6.1 per cent, as a cheaper alternative to following complicated new rules.

It’s also risky to try requiring companies to produce certain products at home, Volpe added: some industries that produce certain types of electronics for automobiles simply don’t exist in North America.

Finally, damaging Mexican competitiveness can boomerang on companies from the other countries.

He said Canadian auto-parts companies have 43,000 employees in Mexico.

Alexander Panetta, The Canadian Press

Just Posted

Site C dam goes ahead, cost estimate now up to $10.7 billion

Premier John Horgan says Christy Clark left him no other choice

Verdict to be delivered December 15 for three on trial in Anahim murders

The fates of Christian Craciun, Andrew Jongbloets, and Serena Rhem (Mack) will be decided on December 15 at 10am.

‘I fell asleep’ admits second mate in Nathan E. Stewart fuel spill

The tug spilled more than 100,000 litres of diesel off B.C.’s northern coast

Northwest’s new MRI hits milestone

Stakeholders celebrate 500th scan of diagnostic imaging device

VIDEO: Best photos of the Supermoon 2017

At its closest, the Frost Moon was about 363,300 km away from the Earth

Six-year-old boy needs $19,000 a month to treat rare form of arthritis

Mother of sick Sooke boy asks government to help fund treatments

Environmental groups slam NDP decision to continue with Site C

Construction industry, meanwhile, is cautiously optimistic about how the project will look

Be ladder safe both at work and home

WorkSafeBC wants you to keep safe while hanging those Christmas lights this year

B.C. overdose deaths surpass 1,200

96 people died of illicit drug overdoses in October

Crown appeals stay against Jamie Bacon in Surrey Six killings

B.C.’s prosecution service says judge’s decision reveals ‘errors of law’

Feds agree to give provinces 75 per cent of pot tax revenues

Finance Minister Bill Morneau announced the agreement today

Red Scorpion associates cuffed in drug-trafficking bust

Kamloops RCMP lay charges in connection to Red Scorpion drug trafficking ring

Greyhound calls for public transportation fund

Made-for-the-north proposal would open northern routes to bidding process

Most Read