USA says Nafta helps Chinese goods reach American market

NAFTA talks high stakes for Arizona's economy

If the Americans are successful in removing it, it could mean disputes between Canada and the U.S would have to go through a US court, something Ambrose said Canadians should be rightly suspicious of.

An increasing amount of Chinese-made components are reaching the U.S. market through Mexico and Canada, at the expense of American manufacturers, Commerce Secretary Wilbur Ross said Friday.

"If we don't fix the rules of origin, negotiations on the rest of the agreement will fail to meaningfully shift the trade imbalance", Ross said in an opinion piece about the study published in The Washington Post.

Canada's chief negotiator Steve Verhuel said he didn't expect this round to see any new US proposal to increase American content requirements for autos.

"The desire is 100 percent to modernize ... it is still true to say no deal is better than a bad deal but obviously that would be a pretty extraordinary set of circumstances", said one person familiar with government thinking.

Ross also expressed that auto parts will play a key role in any renegotiating efforts, as autos and the parts that they're made from constitute almost all of the US trade deficit with Mexico and Canada. Critics have said that could add $5,000 to $15,000 to the price of a vehicle in the U.S.

Right now, NAFTA rules require that at least 62.5 per cent of a vehicle's content must be made in North America to qualify for duty-free access between the United States, Canada and Mexico.

"Any changes will likely be incremental", said Brett Ryan, economist at Deutsche Bank (DE:) in NY.

Still, economists say concerns about damage from the renegotiation may be overblown, with the most likely result of the talks being an updated trilateral agreement after many months or years.

"As I have been saying since the day I got elected to Congress, not only NAFTA, any trade deal that we have must include strong, enforceable provisions to address currency manipulation, the mother of all trade barriers, which is critical for Michigan's economy and the domestic auto industry", she said. According to Commerce's report, released Friday, the OECD's "Trade in Value-Added" (TiVA) data, which covers the period of 1995-2011, shows the share of USA -produced content in manufactured imports from Mexico and Canada declining to 16 percent in 2011, down from 26 percent in 1995.

The first round of talks on updating the NAFTA, which came into effect on January 1, 1994, was scheduled in Washington from August 16 to 20 and the second round was convened in Mexico from September 1 to 5. In 2016 two out of three Americans believed globalization was good for the overall economy and country, but only forty percent thought it created employment and just one in three thought it protected jobs already here.

AJ Freer, vice president of the United Auto Workers union's Local 600, added that NAFTA has allowed companies to take advantage of cheaper labor and lax workplace rules in Mexico. But Verheul said it's "doubtful" negotiators will be able to sign off on the environment chapter during this round, which an American official had earlier suggested was possible.

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