The Trump administration pushed new proposals Friday to change the rules for declaring when an item was “made in America” during the ongoing renegotiations of the North American Free Trade Agreement.
The administration is seeking to increase the standard from 62.5 percent of the components coming from North America to 85 percent and to require that at least half of the components come from the U.S., according to a Reuters report.
The fourth round of talks between the U.S., Canada, and Mexico to renegotiate the 1993 deal is currently being held in Arlington, Virginia. The talks were originally scheduled to be concluded Sunday, but were extended through to Tuesday due to the complexity of the issues being discussed.
U.S. Trade Representative Robert Lighthizer has proposed changes to the trade pact’s “rules of origin” for labeling products that would require automakers to verify the countries from which raw materials such as steel, aluminum, and copper come. Canada and Mexico are reportedly opposing the change. Both countries are home to many companies that form part of the U.S. auto industry supply chain. Changing the rules for labeling products as made in America would severely disrupt their business.
Lighthizer is also pushing to add a sunset clause for NAFTA, and a provision to allow member nations to opt of its investor-state dispute settlement system, among other proposed changes.
Before meeting with Canadian Prime Minister Justin Trudeau at the White House Wednesday, President Trump told reporters, “It’s possible we won’t be able to reach a deal with one or the other. And in the meantime, we’ll reach a deal with one.”
Business groups have been alarmed by the turn the talks have taken. Few believe Canada and Mexico would agree to the changes the administration is making. In a press conference last week, the Chamber of Commerce warned that the administration was making excessive demands it is unlikely to achieve. This has business groups fearing the administration might pull out of NAFTA altogether, a threat Trump has repeatedly made in the past.
The Motor Equipment Manufacturers Association released a study Friday that found that 24,000 jobs could be lost under the administration’s proposed rules of origin changes.
Labor groups, which have long called for changing the deal’s rules origin, have been cautiously optimistic. “Rules of origin, investor-state dispute settlement, currency issues, and many others need to be addressed in any renegotiated agreement,” said United Steelworkers President Leo Gerard in a statement Friday.
