Ball of Confusion

Sept. 5, 2018

I might be overstating it a bit with this title, but I do find the tentative US/Mexico trade deal, or as the White House calls it a “preliminary trade agreement,” somewhat confusing. The Administration says it’s going to submit the agreement that was reached last week to Congress and set up under the Trade Promotion Authority (TPA) a 90-day congressional review process.

The problem is that it might not even be eligible to be considered by the TPA. It might not even meet the standards of congressional negotiating priorities. And of course, on top of it all, Canada isn’t included in the agreement. And if it is eventually included, and we end up with an updated NAFTA of some sort, will that mean the end of this particular preliminary trade agreement?

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According to the Association of Equipment Manufacturers (AEM), here’s what we need to know at the moment:

  • The agreement would have serious financial implications for the North American auto and auto parts industries by increasing regional value content rules and establishing complex compliance requirements in order to obtain duty-free trade across the border.
  • It also provides a “review and term extension” requiring a review every six years. And if either trading partner decides to terminate the agreement, 10 years later it would no longer be enforced.
  • In addition, certain legal protections under the Chapter 19 dispute settlement process have been removed, and the agricultural chapter has been updated to include several AEM priorities, including updated standards for agricultural biotechnology and keeping zero-tariff trade in agricultural commodities.
  • This agreement also doesn’t affect the Section 232 steel and aluminum tariffs or any subsequent Mexican counter-tariffs placed on US products.  

Talks with Canada are scheduled to resume this week.

The following report is from the CBC: