The United States and Canada failed to agree on terms of a new North American Free Trade Agreement (NAFTA) this week. The deadline for doing so was Friday, August 31st.
Negotiations will resume on Wednesday, but the fate of the three-nation agreement is becoming less certain. Even so, negotiating officials from both the United States and Canada confirmed that they will continue working toward a trilateral agreement, with good progress being made in overhauling the 24-year-old trade deal.
“We know a win-win-win agreement is within reach and that’s what we’re working towards,” said Canadian Minister of Foreign Affairs Chrystia Freeland during a Friday press conference.
One of the biggest points of contention are concessions on agriculture, with the U.S. looking for Canada to end its steep tariffs on U.S. dairy products, which President Trump claims hurt U.S. farmers. But Canadian Prime Minister Justin Trudeau has promised to protect the dairy industry of his nation.
“The government of Canada will not sign an agreement unless it’s good for Canada and good for Canadians,” Freeland said Friday.
Another principal issue is auto trade, with Trump having threatened to impose new tariffs on Canadian-made cars coming into the U.S.
“If we don’t make a deal with Canada, that’s just fine. I say, affectionately, we’ll just have to tariff those cars coming in.”
Negotiations will resume next week, but the U.S. has already reached a bilateral deal with Mexico that calls for 75 percent of automotive content (parts) to be made in the NAFTA region, up from the current requirement of 62.5 percent. The requirement is expected to shift production of some automotive parts to Mexico from China.
In addition, the bilateral deal requires 40 to 45 percent of auto content to be made by workers earning at least $16 per hour. The move will likely result in the relocation of some automotive production from Mexico to the United States, but could also result in an increase in Mexican automotive wages.
In addition, the agreement limits exports of Mexico-made vehicles to the United States at 2.4 million vehicles annually, with any volumes above that level being subjected to tariffs.