Grim reality of NAFTA talks sets in after tough US demands

Former US trade representative Robert Zoellick said he thought there was a 50-50 chance Donald Trump would quit NAFTA. (Reuters)
Updated 15 October 2017

Grim reality of NAFTA talks sets in after tough US demands

ARLINGTON, Virginia: Negotiators from Canada and Mexico grappled with US demands to drastically alter the North American Free Trade Agreement on Saturday, as talks over renewal of the pact vilified by President Donald Trump ran through a fourth straight day.
Some downcast participants said the demands, unveiled this week in line with Trump’s “America First” agenda, have increased the odds of NAFTA’s demise. At the very least, they could make it impossible to reach a deal renewing the treaty before a year-end deadline.
“The atmosphere is complicated,” one trade official told reporters, adding that his fears about some “pretty harsh, pretty horrible” demands from the US side of the negotiating table were coming true.
Speaking on condition of anonymity because the talks are confidential, the official added the US stance “has a clear protectionist bias, a bias that is trying to eradicate, minimize, eliminate the mechanisms that existed in NAFTA in the last 20 years.”
Trump, who blamed NAFTA for shifting US manufacturing jobs to Mexico during his election campaign last year, has repeatedly vowed to scrap the treaty unless it can be renegotiated on more favorable terms.
At the mid-point of seven scheduled negotiating rounds, many of the US proposals appear aimed at turning back the clock on changes in the global economy since NAFTA took effect 23 years ago. Collapse of the deal could reverberate well beyond North America, where trade between the United States, Canada and Mexico has more than quadrupled since 1994.
Former Mexican Trade Minister Jaime Serra, who was responsible for negotiating the original trade pact, said there was no economic logic to the US demands.
“Issues are being put on the table that are practically absurd,” he told Reuters. “I don’t know if these are poison pills, or whether it’s a negotiating position or whether they really believe they’re putting forward sensible things.”
Some officials from NAFTA governments said they knew all along the negotiations would be tough, but vowed to soldier on through the three remaining scheduled rounds of talks.
“We said from the beginning that this was never going to be easy,” Canadian Trade Minister Francois-Philippe Champagne told CBC radio. “We want to be at the table, be constructive, offering alternative proposals.”
One of the US proposals unveiled this week would require that 50 percent of the value of all NAFTA-produced cars, trucks and large engines come from the United States, people briefed on the negotiations said.
The same proposal calls for a sharp increase in NAFTA’s regional automotive content requirement, boosting it to 85 percent from the current 62.5 percent. The existing level is already the highest local content requirement of any trading bloc in the world.
Meanwhile, the Trump administration’s call for a so-called NAFTA sunset clause would effectively trigger a renegotiation of the pact every five years. Serra said the US content requirements would distort NAFTA trade with “pure protectionism” while the sunset clause would choke off investment decisions with uncertainty.
US negotiators also want to end a trade dispute settlement system that has deterred US anti-dumping cases while erecting new protective barriers for seasonal fruit and vegetable growers. And though Canada and Mexico had sought more access to US government procurement contracts, they were met this week with a proposal that would effectively grant them less.
Even before the current round of negotiations got underway in a suburban Washington hotel, US Trade Representative Robert Lighthizer said NAFTA was “lopsided” in favor of Mexico and Canada and needed major changes to rebalance it.
“The president has vowed to bring jobs and investment back to the United States,” Lighthizer said. “We will do no less.”
One of Lighthizer’s predecessors, Robert Zoellick, said he thought there was a 50-50 chance Trump would quit NAFTA.
“He’s trying to go back to make trade agreements fix the bilateral trade deficit. I don’t believe he can be successful in doing that,” Zoellick, now non-executive chairman of AllianceBernstein, told a banking conference in Washington on Saturday.


Lufthansa to freeze hiring, cut costs over coronavirus

Updated 26 February 2020

Lufthansa to freeze hiring, cut costs over coronavirus

  • ‘All new hires ... will be reassessed, suspended or deferred’
  • Lufthansa has also slashed connections with Hong Kong in the face of reduced demand

FRANKFURT AM MAIN: German airline Lufthansa said Wednesday it would freeze new hires and use unpaid leave and additional short-time work to cut costs to help cushion the economic impact of the novel coronavirus.
“To counteract the economic impact of the coronavirus of the early stage,” the group, which also owns carriers Austrian and Swiss, said in a statement that “all new hires ... will be reassessed, suspended or deferred.”
Employees would be offered unpaid leave and more part-time work and the group would also seek to cut administrative costs, it said.
“It is not yet possible to estimate the expected impact ... on earnings,” the group said, adding that it would provide more details at its annual results press conference on March 19.
The Frankfurt-based group said 13 of its aircraft were grounded, after it canceled all flights to and from mainland China by its flagship airline, as well as Austrian and Swiss until March 28.
Lufthansa has also slashed connections with Hong Kong in the face of reduced demand “and additional frequency adjustments to and from Frankfurt, Munich and Zurich are planned,” it said.