Nine months into the Trump regime we finally have some idea what they hope to gain by forcing the renegotiation of the North American Free Trade Agreement (NAFTA) and it looks like they're asking for the impossible.
While Mexican officials seek protections for their private mining industry and Canadian officials advocate for workers rights in the US, American officials are asking for car manufacturing standards that American producers probably can't even meet.
The U.S. Chamber of Commerce on Tuesday accused Trump’s administration of trying to sabotage the talks with “poison pill proposals”, including demands on car production and a “sunset clause” to force regular negotiations. [...]
People briefed on the new U.S. proposals to be presented this week said that USTR is seeking to sharply lift North American content threshold for autos and auto parts.
The proposals call for North American content overall to rise to 85 percent from the current 62.5 percent. In addition, the United States wants to add a new 50-percent U.S.-specific content requirement, something that was not in the earlier agreements.
In other words, the Trump regime wants to pass a rule that says at least 85 percent of the car parts that are used to build cars in North America must also produced in North America.
That's probably not possible as even Mexican manufacturers import products from overseas, but passing a new rule that says 50 percent of car parts used to build cars in North America must produced exclusively in the United States is preposterous.
Even if you were arrogant enough to believe the United States should have exclusive control of the majority of the auto parts industry in North America, we don't have the manufacturing capacity in 2017 to meet those demands.
I wouldn't necessarily say you're wrong to believe that we should manufacture more parts here, but it's not as if an industry that's been on a downward spiral since the 1980s can be resurrected on a whim. And even if the auto industry did begin building new manufacturing plants here in the United States to meet future demands, they would be largely automated.
Mexican and Canadians officials aren't going to agree to these demands because for them it would mean letting the United States interfere in their own trade agreements with other nations.
Mexican Foreign Minister Luis Videgaray warned that an end to NAFTA would mark a breaking point in U.S.-Mexican relations and affect bilateral cooperation in non-trade areas. [...]
“These will be met with widespread opposition from Canada and Mexico. I think it’s just a bridge too far,” said Wendy Cutler, the Asia Society’s Washington policy director and former chief U.S. negotiator for the Trans-Pacific Partnership trade deal canceled by Trump.
I don't know how this is going to end, but I can see a scenario in which the American auto industry files lawsuits against the Trump administration if Congress does not stop him from withdrawing from NAFTA.