Automotive News Canada - September 2017 - v2 - 23

* SEPTEMBER 2017

BEST-CASE SCENARIO

Negotiations quickly produce a modernized
agreement that addresses new sectors, such
as the digital economy and energy, without
penalizing Mexico for its trade surplus with
the U.S.

WORST-CASE SCENARIO

The United States tries to raise some duties
to slow imports from Mexico, or takes other
positions designed to drain manufacturing
jobs from Mexico back to the United States.
Mexico walks out of talks with no agreement
and Trump pulls out of NAFTA. Wild cards:
Trump makes nationalistic statements about
Mexico trade, immigration or the border
wall that ignite populist sentiment in Mexico
against the deal; Trump tries to force Mexico
to pay for his border wall through some type
of tariff; the United States overplays its hand,
forcing Mexico's leaders to show that they
won't cave to U.S. pressure.

AUTOMAKERS
KEY PLAYERS

Association of Global Automakers,
Mexican Automotive Industry Association,
American Automotive Policy Council.

STRATEGY

Push negotiators to maintain existing
rules of origin, with Detroit Three seeking
provisions on currency manipulation and
wider acceptance of U.S. vehicle standards in
Canada and Mexico, so that updated NAFTA
becomes template for future free trade agreements.

WISH LIST

* Avoid U.S.-content requirements that
could make Canadian assembly plants less
attractive for future investment.
* No increase in regional content requirement under rules of origin.
* Ensure that U.S. federal vehicle safety/
emissions standards are accepted in Canada
and Mexico; avoid new trade barriers.

BEST-CASE SCENARIO

Status quo on rules of origin, or simplification of methods for tracing and calculating
regional content.

WORST-CASE SCENARIO

Higher North American content requirement under rules of origin.

SUPPLIERS
KEY PLAYERS

Automotive Parts Manufacturers
Association, U.S. Motor & Equipment
Manufacturers Association, Mexican National
Auto Parts Manufacturing Association.
Linamar CEO Linda Hasenfratz is on 13-member Canadian NAFTA advisory committee.

STRATEGY

Stress to U.S. officials that trade barriers and other efforts to re-shore manufacturing are counterproductive because plants are
already at capacity and higher prices will lead
to removal of some components at the cost of
jobs.

WISH LIST

* Improved border-crossing procedures,
especially as Canada and Michigan invest
in new Windsor-Detroit bridges for speedier
movement of parts, car-haulers.
* Flexibility on how to qualify items for

NAFTA duty treatment and
updated rules of origin that
reflect new manufacturing
realities.
* Alignment of data protection and privacy laws so data
can freely flow within NAFTA.
* Harmonization of Mexico's
safety and environmental regulations with Canada and the United
States.
* More flexible movement of
business visitors and skilled professionals through intra-NAFTA
work visas, a move that would benefit global Canadian suppliers such
as Magna and Linamar.

BEST-CASE SCENARIO

Status quo or modest changes that
don't create unintended risks and disrupt supply chains.

WORST-CASE SCENARIO

More trade barriers between
NAFTA countries and higher
rules-of-origin requirements. Global
Canadian suppliers such as Linamar
and Magna could shift their global
production strategies as a result.

LABOUR

KEY PLAYERS

Unifor and union President Jerry
Dias; UAW and union President Dennis
Williams.

STRATEGY

Unifor and the UAW aim to exert public
pressure on Canada and U.S. officials to enact
more protectionist measures that would keep
or bring back auto jobs to their nations. They
also want Mexico to agree to higher labour
standards to raise Mexican workers' standards of living. Dias has said Canada is better
off pulling out of the "garbage" NAFTA than
it is if an agreement fails to address those concerns.

WISH LIST

* Make sure nonbinding side agreements
on labour rights become full part of NAFTA
and are enforceable.
* Revise North American rules-of-origin
requirements to force investment in Canada
and U.S. plants.
* Eliminate investor-state dispute settlement system, which allows foreign companies to challenge government regulations that
allegedly undermine the value of their investments.

BEST-CASE SCENARIO

Require countries to have legislation governing minimum wages, hours of work, occupational safety and health.

WORST-CASE SCENARIO
Status quo.

Canada's International Trade Minister
Francois-Philippe Champagne defends
NAFTA. "The numbers speak for themselves."
(PHOTO: GOVERNMENT OF CANADA)

Table of Contents for the Digital Edition of Automotive News Canada - September 2017 - v2