U.S. President Donald Trump is expected to announce this Friday, August 31 that he is launching the lengthy process required to transform NAFTA into a bilateral deal between the U.S. and Mexico. The many provisions cover key issues such automobile manufacturing (75 percent of auto content must be made in the U.S. and Mexico), labour costs for auto workers (40-45 percent of auto content must be made by workers earning at least $16 per hour), and stronger rules of origin, including for industrial products such as chemicals, steel-intensive products, glass and optical fiber.
Ratification is likely not possible until March 2019 – or later – as multiple steps still need to be completed. For example, under the rules of NAFTA, the U.S. must give leaders of Canada and Mexico 6 months notice of the plan to withdraw from the trade agreement. The U.S. Congress also requires 90 days advance notice.
An added complicating factor is the upcoming mid-term elections, which many observers are forecasting will lead to a Democrats majority firmly against the proposed trade deal between the U.S. and Mexico. In addition, Mexico is on record as saying it favours a trilateral deal that includes Canada.
Watch for updates on the latest developments and remember we are here to help if one of the many trade disputes has had a negative impact on your business.
For more information please call Brian Rowe, Director – Customs Compliance & Regulatory Affairs at (905) 882-4880, ext. 213.