Trade Cases
NAFTA Round Two: Rules of Origin
Written by Sandy Williams
September 5, 2017
Round two of NAFTA negotiations wound up today, with no resolution in sight. Among the many issues being debated, the topic of rules-of-origin is proving to be contentious for Canadian and Mexican negotiators, as well as auto producers.
U.S. negotiators are proposing that U.S. content in NAFTA-eligible vehicles be raised to between 35-50 percent, according to sources cited by Reuters. A lobbyist told Reuters that at least 35 percent content would be necessary to meet Trump administration requirements. “Anything less would not be a political victory” for Trump, the lobbyist said.
Any additional increase in U.S.-specific content is being met with resistance by automakers, which rely on automotive parts from all three of the NAFTA nations. A more creative solution to tracing origin could be achieved by acknowledging research and development as a contribution to the percentage of origin content. Most of the R&D for the U.S. auto industry is based in Detroit. Automakers would like to avoid expensive retooling and geographic shifts in parts manufacturing that could occur should origin rules be changed.
To be considered a NAFTA product, content origin must be must be at least 62.5 percent North American. Canadian labor leader Jerry Dias said Commerce Secretary Wilbur Ross wants to increase that percentage “significantly.” A percentage of 70 to 80 percent has been suggested by the administration, according to World Trade Online.
The U.S. has proposed a December deadline for a renegotiation of the terms of the NAFTA agreement—before American midterm congressional elections and the Mexican presidential elections. Few believe the deadline can be accomplished given the lack of written details and firm policy statement by U.S. negotiators.
“Personally, I don’t think we can make a deal because we have been so badly taken advantage of,” Trump said Aug. 23 during a rally in in Arizona. “I think we’ll end up probably terminating NAFTA at some point.”
Whether that statement is bluff or a serious assertion is yet to be determined.
Negotiators will meet Sept. 23-27 for a third round of talks in Ottawa.
Sandy Williams
Read more from Sandy WilliamsLatest in Trade Cases
Price: One-off deal for the UK, pause in China trade war, and more
International trade remains at the forefront of President Trump’s agenda, especially as new negotiations and investigations continue to be announced.
Three Italian CTL plate companies get AD duties, two removed
Commerce began a review of five producers/exporters: NLMK Verona; Officine Technosider; F.A.R. Fonderie Acciaierie; Ferriera Valsider and Metinvest Trametal.
Commerce lays out final results for CVD review on certain Korean CR products
The period under review is Jan. 1, 2022, through Dec. 31, 2022.
Commerce gives final CVD results on certain Korean CORE products
The US Commerce Department has provided the final results for the countervailing administrative review of certain corrosion-resistant steel products (CORE) from South Korea.
Leibowitz: The UK trade agreement, a template for future trade deals?
The UK deal may signal relaxation of the heaviest tariffs. The suspension of the reciprocal tariffs greater than 10% - remember, 57 countries were hit with that - ends on July 9. But it could be extended. If more deals like the one with the UK are struck, the suspensions may continue to permit more agreements - relieving global markets of considerable worry.