[CTC] Lighthizer rejects Canada’s auto rules-of-origin ideas, laments slow pace of talks

[Arthur Stamoulis]

INSIDE US TRADE
 
Lighthizer rejects Canada’s auto rules-of-origin ideas, laments slow pace of talks

January 29, 2018 
U.S. Trade Representative Robert Lighthizer on Monday closed a sixth NAFTA negotiating round here by roundly rejecting a Canadian auto rules-of-origin proposal and other new ideas advanced by Ottawa, acknowledging some progress in the talks but lamenting their slow pace and stressing the urgency of speeding them up.

Lighthizer also blasted Canada’s recent World Trade Organization challenge of U.S. trade remedy laws, suggesting that buying into it would mean “24 years ago the United States effectively gave away its entire trade regime in the Uruguay Round. Of course we view this case as frivolous, but it does make one wonder if all parties are truly committed to mutually beneficial trade.”

One chapter, on corruption, was closed at the round, Lighthizer noted, acknowledging progress in other areas as well.

“More importantly, though, we finally began to discuss some of the core issues,” Lighthizer continued. “So this round was a step forward. But we are progressing very slowly. We owe it to our citizens who are operating in a state of uncertainty to move much faster.”

Lighthizer then pivoted to two specific proposals advanced by Canada. On the auto-rules-of-origin approach, which he called a “presumed compromise,” Lighthizer said the U.S. found Canada’s ideas, “when analyzed, may actually lead to less regional content than we have now, fewer jobs in the United States, Canada and likely Mexico. So this is the opposite of what we are trying to do.

“And in another proposal Canada reserved the right to treat the United States and Mexico even worse than other countries if they enter into future agreements,” he added, without elaborating. “Those other countries may in fact even include China if there's an agreement between China and [Canada]. This proposal, I think if the United States had made it, would be dubbed a 'poison pill.' We did not make it, though. Obviously this is unacceptable to us and my guess is it is to the Mexican side also.”

Lighthizer’s broadside against Canada continued with a segue to concerns over Ottawa’s recent decision to protest six U.S. trade remedy measures related to anti-dumping and countervailing duty investigations, reviews and proceedings.

The USTR reiterated his initial complaints <https://insidetrade.com/node/161551> about the action, which he called “unprecedented” and a “massive attack on all of our trade laws” that if successful would lead to more Chinese imports into the United States “and likely fewer Canadian goods being sold in our market.”

“Now we understand that countries often challenge specific actions taken by another country in the context of trade law,”he said. “This is normal and what we expect. But this litigation essentially claims that 24 years ago the United States effectively gave away its entire trade regime in the Uruguay Round.”

The case, he said, “also underscores why so many of us are concerned about binding dispute arbitration. One sovereign nation would trust to arbitrators or to the flip of a coin their entire defense against unfair trade.”

Lighthizer concluded by repeating his belief that “some real headway was made here today” and pledging that the U.S. remained “committed to moving forward. I am hopeful progress will accelerate soon. We will work very hard between now and the beginning of the nest round and we hope for major breakthroughs during that period.”

The next round is set for late February in Mexico. Before then, Lighthizer said, the U.S. will “urgently” engage with Mexico and Canada -- “and we will go where these negotiations take us.”

Canadian Foreign Minister Chrystia Freeland took a more sanguine approach in her concluding remarks, saying she was pleased with the progress achieved and lauding the three countries for “constructive dialogue” on “fundamental issues.”

In addressing the U.S. concern over trade deficits, Freeland cited U.S. figures -- Lighthizer had pointedly used Canadian numbers -- to note an overall U.S. trade surplus. She also cited the record U.S. stock market gains over the last few years as evidence that the U.S. economy was not “broken.”

Canada, Freeland said, advanced “creative” ideas on “unconventional U.S. proposals” including auto rules of origin. The Canadian approach, she argued, would draw new investments and deal with new technologies -- and she said it has the support of the automotive industry.

Freeland also said Canada put forward a proposal for a “rigorous, meaningful five-year review process to ensure NAFTA is working well for all partners” in adapting to technological change, a counter to an earlier U.S. hope for a five-year sunset clause.

Mexican Economy Secretary Ildefonso Guajardo, who spoke first, briefly acknowledged progress made in key areas that he said would “put us on the right track to create landing zones to conclude this process.”

Mexico, he said, is “is committed to intensify our engagement” in the talks. -- Dan Dupont (ddupont at iwpnews.com <mailto:ddupont at iwpnews.com>)


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