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The main blocking points between the United States, Canada and Mexico in the NAFTA negotiations

Discussions on the free trade agreement that bind the three countries started in mid-August. U.S. President Donald Trump has consistently denounced NAFTA as a "disaster."

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The main blocking points between the United States, Canada and Mexico in the NAFTA negotiations
Discussions on renegotiation of North American Free Trade Agreement (NAFTA) were due to be completed by end of year. But y will continue in 2018 to resolve many contentious issues between Canada, United States and Mexico.

These negotiations were opened as American president, Donald Trump, had never ceased to denounce NAFTA as a "disaster", attributing to him responsibility for many disappearance of jobs in United States. The main blocking points between three countries result from US willingness to weaken or suppress existing measures that Trump administration deems detrimental to its economy.

The sunset clause

In new Treaty, United States wants to have a "sunset" clause in order to repeal NAFTA after five years. This clause clashes with opposition of Mexican and Canadian negotiators. "The new treaty must create a stable [business] climate necessary for job creation." That is why sunset clause [...] is totally unacceptable, denounced Mexican minister of economy, Ildefonso Guajardo Villarreal, observing that investors were not going to risk ir capital with a possibility of programmed death of Treated every five years.

The current NAFTA, which came into force in 1994, authorizes a partner to withdraw from agreement with a six-month notice, but Americans argue that sunset clause would lead to a regular "review" of agreement.

The "chapter 19"

The settlement of commercial disputes is anor obstacle. This mechanism, known as "chapter 19", is considered unfair by Washington for industries and for American workers. It allows for adjudication of countervailing duty and dumping disputes between three NAFTA signatory countries.

It is fundamental to Canada, which has successfully used it in conflict about timber, or lumber. This litigation has seen a lot of twists since 1983, with American producers accusing ir Canadian counterparts of exporting this wood to United States at a dump price, which is lower than production costs.

"As well as strong barriers to good neighbours, strong mechanisms to resolve litigation make good business partners," said Chrystia Freeland, Canadian Minister of Foreign Affairs.

Canadians have support of Mexicans. In July, Mexican Parliament had asked government to refuse any deletion of chapter 19 in renegotiation of Treaty.

Chapter 11

The Trump administration wishes to delete anor commercial dispute resolution procedure, as specified in article 11 of current Treaty and known as ISDS (Investor-State dispute settlement). It allows businesses and investors to prosecute governments directly in court.

While being target of opposition of several civil society associations, it is also supported by many American companies.

Supply Management

The Trump administration pleads for deletion of a device that it deems to be in favour of its North American partner: "supply management" system for milk, eggs and poultry, defended by Canadian Prime Minister, Justin Trudeau.

This quota and price control system ensures that Canadian producers have a stable income, despite market fluctuations, while maintaining a certain price stability for consumers.

But Ms. Freeland reiterated Ottawa's strict opposition to this American proposal, emphasizing that American producers also benefited from state subsidies in this sector.

The Rules of origin

According to NAFTA rules of origin, items manufactured mainly in North America can be exchanged within region without customs duties, even if y contain spare parts of anor origin.

Washington deplores continuing decline in share of U.S.-origin parts and components in manufactured products since NAFTA came into force in 1994. This is a particularly sensitive issue for automotive industry.

The current agreement specifies that at least 62.5% of components of a vehicle must be manufactured in one of three NAFTA countries to ensure that it is not struck by tariffs at customs.

The Trump administration would require 85% of car parts to be manufactured in one of three countries – and 50% of se parts exclusively in United States. It would also require consideration of steel, aluminum, copper and plastics used in se parts for determination of ir origin, according to information published in American and Canadian Press.


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