By Barry Ellsworth
Round five of North American Free Trade Agreement (NAFTA) negotiations ended Tuesday in Mexico City with Canada admitting there are “significant” sticking points that could kill the deal.
Chrystia Freeland, Canada’s foreign affairs minister, told reporters at the conclusion of the talks that the United States insisted on changes that were unacceptable because they could hurt the Canadian auto sector. She spoke to the media in Ottawa.
“There are some areas where some extreme proposals have been put forward, and these are proposals that we simply cannot agree to,” Freeland said, adding that the U.S. has not budged on contentious issues since the talks began in August.
Canada, the U.S. and Mexico are renegotiating the free trade deal at the insistence of U.S. President Donald Trump.
A reporter asked if Freeland felt the negotiations could fall through.
She answered that officials “hope for the best and prepare for the worst, and Canada is prepared for every eventuality”.
One of the most controversial changes demanded by the U.S. is that parts for automobiles must be 85 percent made in North America, up from the current 62.5 percent, and of the 85 percent, half must be made in the United States. There is currently no rule governing U.S. content for automobiles.
Trump has threatened to tear up the deal in part because of the loss of manufacturing jobs to Mexico. But under the new proposal, the Alliance of Automobile Manufacturers, which includes GM and Ford, said the rules would be too harsh and would lead to further job losses. The automakers would simply shift production to low wage countries like China and then pay the duty of 2.5 percent when the foreign-made cars were shipped to the U.S.
Trump has also insisted that the deal be reviewed every five years, another point that irks Canada, Freeland said.
“I’ve been married for 19 years. When my husband asked me to marry him, he didn’t say every five years we’re going to check whether we want to get divorced or not,” she told reporters Tuesday.
“We don’t think that’s a good foundation for a lasting relationship.”
The next round of NAFTA talks will be held in Montreal in January.