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

Oppal says Surrey mayor wrong about policing transition timeline

Chairman of committee overseeing Surrey’s transition from RCMP to city police says work won’t be done by Dec. 11

Farnworth says Surrey RCMP boss’s statement on budget should be taken ‘seriously’

Assistant Commissioner Dwayne McDonald warned Surrey’s budget will have “detrimental effect” on policing

New date set for suspects in South Surrey Hells Angel murder

Court heard that both sides are prepared to set preliminary hearing date

Struggles of South Asian gays and lesbians documented in new film

‘Taboo topic’ explored in Sher Vancouver-backed ‘Emergence’ doc movie, due out next year

Surrey RCMP find no evidence of gunfire after report of shots fired

Police say investigation ongoing; CCTV footage is being reviewed

VIDEO: Federal Liberals’ throne speech welcomes opposition’s ideas

Trudeau will need NDP or Bloc support to pass legislation and survive confidence votes

VIDEO: Rockslide closes part of Highway 93 in Fairmont Hot Springs

Geotechnical team called in to do an assessment after rocks fell from hoodoos

Chilliwack mom gives back to neonatal unit with Christmas stocking drive

Ashley Durance is paying it forward to other families and their babies following daughter’s NICU stay

Petition calls for appeal of ex-Burns Lake mayor’s sentence for sex assault

Prosecution service says Luke Strimbold’s case is under review

Northwest B.C. wildlife shelter rescues particularly tiny bear cub

Shelter co-founder says the cub weighs less than a third of what it should at this time of year

BC firefighters to help battle Australian bushfires

Canada sent 22 people, including 7 from B.C.

B.C. NDP touts the end of MSP premiums

Horgan, James held news conference to reiterate that people will get their last bill this month

Illicit drug deaths down, but B.C. coroner says thousands still overdose

Chief coroner Life Lapointe says province’s drug supply remains unpredictable

One of B.C’s last surviving strip clubs baring all again for Christmas charity

25th annual event is Sunday and raises money for the Maple Ridge-Pitt Meadows Christmas Hamper Society.

Most Read