07Sep

‘Important progress’ at NAFTA talks, ministers say

septiembre 7, 2017 Jesus Aguirre

OTTAWA—Canada, the U.S. and Mexico put a positive spin Tuesday on what sources say was a tough five-day round of negotiations to rewrite North American free trade rules.

Canada’s Foreign Affairs Minister Chrystia Freeland, U.S. Trade Representative Robert Lighthizer and Mexican Secretary of the Economy Ildefonso Guajardo presented a united front on a stage as talks wrapped up in Mexico City.

Each in turn praised the “hard work” negotiators did at the table. Lighthizer said their efforts consolidated into two dozen chapters that will form the basis for the next round of talks to be held in Ottawa Sept. 23-27.

A joint statement issued by the three after their appearance emphasized that “important progress was achieved in many disciplines” and said more is expected in the coming weeks as negotiators take a break to consult with their respective industry associations and political decision-makers.

The communiqué said all three countries “reaffirmed their commitment to an accelerated and comprehensive negotiation, with the shared goal of concluding the process towards the end of this year.”

However speaking to reporters in Mexico City, Freeland acknowledged there are disagreements even as she insisted “North American relations are fundamentally solid.”

“Of course this doesn’t mean we’re going to agree on all points. But our deep friendship will permit us to resolve disagreements which arise at times” she said, as negotiators focus on the “difficult task of modernizing NAFTA.”

She said all “wholeheartedly share the goal of reaching a mutually beneficial agreement.” She rhymed off data to say the North American Free Trade Agreement has benefited the U.S. to the tune of an extra $127 billion in economic activity each year since it was signed.

And in contrast to U.S. President Donald Trump’s threat to ditch the talks and kick-start the legislative process to kill NAFTA, Trump’s chief trade envoy Lighthizer agreed there was “mutual agreement on many important issues.”

But Lighthizer also stressed a new NAFTA that benefits U.S. workers and industry is a “very important priority” for Trump.

“That’s why American delegation focused on expanding opportunities for American agriculture services and innovative industry, but …we also must address the needs of those harmed by the current NAFTA, especially our manufacturing workers.”

“We must have a trade agreement that benefits all Americans and not just some at the expense of others,” Lighthizer said. “I am hopeful that we can arrive at an agreement that helps Americans workers, farmers and ranchers while also raising the living standards of workers in Mexico and Canada.”

Guajardo struck a conciliatory note after last week, saying Mexico had to work on a “plan B” and anticipate a failure of the talks. He said Tuesday that Mexico was committed to a process that accommodates “each country’s interests.”

“In the process, I recognize we have responsibility to translate our negotiations into a final result that will imply more jobs in North America, jobs that are well-paid jobs, and to strengthen basic principles in this continent,” he said.

It was a diplomatic dance that belied many of the difficulties behind the scenes. Sticking points include the U.S. insistence on gaining greater access to Canada’s dairy and poultry sectors, its demand to end independent dispute resolution processes, and its demand that “Buy American” provisions — whether for auto parts or for government procurement projects — be protected.

Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, said in an interview that one of the difficulties is that although the U.S. insists it wants to increase American content in the automotive sector by drafting tougher “rules of origin” or stiffer tracing of the origin of auto parts, it still has not put any substantive numbers on the table. Right now, vehicles and auto parts are required to have 62.5-per-cent North American content to travel tariff-free across continental borders.

Volpe suggested the failure of the U.S. trade representative (USTR) office to put a hard number on the table may in fact be a good thing. He said the USTR may be documenting for the Trump White House data that negotiators, senators and congressional leaders, especially those with auto plants in their districts, already know, having recently gone through trade negotiations for the Trans-Pacific Partnership that also dealt with “rules of origin” debates.

“The fact that we haven’t seen a number and we haven’t seen proposals confirms for me that the USTR is doing the hard work of inventorying where the American assets are, and they’re going to get to the same conclusion that we did: the American assets and interests are all over the map in North America. It’s going to be very difficult to cleave them off.”

04Sep

NAFTA negotiators seek to enshrine Mexico’s energy reforms

septiembre 4, 2017 Jesus Aguirre

MEXICO CITY (Reuters) – U.S., Canadian and Mexican negotiators are zeroing in on ways to enshrine Mexican President Enrique Pena Nieto’s sweeping energy reforms into a modernized North American Free TradeAgreement, Mexico’s chief negotiator said on Saturday.

The 2014 reforms wrung control of the country’s oil and gas sector from state hands, opening it up to private investment, and incorporating them into the 23-year-old NAFTAis seen as a way to help preserve them for the long term.

“We’re working in this sense, analyzing all of the elements that need to be included in the energy discussion to reflect the reform Mexico established,” Mexico’s chief tradenegotiator, Kenneth Smith, said on Saturday after a bargaining session in the second round of NAFTAmodernization talks.

Smith, speaking to reporters as he walked side-by-side with his counterparts John Melle of the United States and Steve Verheul of Canada, added that negotiators would “look for mechanisms that allow us to integrate ourselves in a positive way in the energy sector.”

Tradenegotiators from the three nations are working through the weekend in Mexico City to present more proposals to revamp NAFTA, an accord that underpins more than $1.2 trillion in annual cross-border trade.

When NAFTAwas enacted in 1994, Mexico’s energy sector was closed and Pena Nieto’s reforms ended a decades-long monopoly for national oil company Pemex and ensured competitive oil auctions. Incorporating them into NAFTAwould help shield them from any future governments that may want to reverse them.

Tradeexperts both in the United States and Mexico have said that increasing energy tradeand investments through NAFTAwould help reduce the $64 billion U.S. tradedeficit with Mexico that irritates U.S. President Donald Trump, partly through increased U.S. gas and oilfield equipment sales to Mexico.

PENA NIETO STRIKES BACK AT TRUMP’S SWIPES

Trump has repeatedly threatened to rip up NAFTA, warning he could do so again just this week.

Pena Nieto, in his annual address to the nation on Saturday, defended free tradeand young migrants in the United States, saying his government would not accept insults against “national dignity” from Trump’s administration.

“The relationship with the new government of the United States, like any other nation, must be based on irrevocable principles: sovereignty, defense of the national interest and protection of our migrants,” Pena Nieto said.

“We will not accept anything that goes against our national dignity,” he told a crowd of politicians and the country’s elite, who rose at that point to deliver the most vigorous standing ovation of his address.

Trump this week also insisted again that Mexico would eventually pay for his proposed wall on the southern U.S. border to block the flow of illegal immigrants and drugs.

Pena Nieto shied away from mentioning the wall but said Mexico would promote the recognition of migrants for their contributions and reject discrimination against them.

Pena Nieto also said Mexico would continue to defend NAFTAas a vehicle to further integrate the region.

“The negotiating team has precise instructions to participate in this process with seriousness, good faith and a constructive spirit,” he said, “always putting first the interest of Mexico while reaching for a result where all three countries win.”

Trump has repeatedly threatened to pull out of NAFTAif talks do not go his way and on Saturday said he would discuss next week with his advisers whether to withdraw from a tradedeal with South Korea that he has also long criticized.

Top Mexican officials said Latin America’s No. 2 economy would walk away from negotiations if Trump moves to withdraw from the deal.

Negotiators were going to take until Monday to get to one of the thorniest issues, U.S. demands for increased North American and U.S. content for autos and other manufactured goods, according to a schedule seen by Reuters.

Mexico’s Smith said no specific proposals had been put on the table by U.S. negotiators regarding rules of origin.

25Ago

Mexico shrugs off Trump threats to scrap NAFTA

agosto 25, 2017 Jesus Aguirre

MEXICO CITY — One week into talks to renegotiate NAFTA, President Trump lobbed another grenade over his so-far-imaginary Mexico border wall, telling a rally in Phoenix on Tuesday night that “I don’t think we can make a deal.”

Trump’s argument was a familiar one, that the United States has been “so badly taken advantage of” by “one of the worst deals” that “we’ll end up probably terminating NAFTA at some point.”

Mexico’s public reaction to what would be a massive economic development — if followed through on — was essentially a yawn. Foreign Minister Luis Videgaray brushed off Trump’s comments as simply a negotiating tactic that should not surprise or frighten Mexico.

“He’s negotiating in his own particular style,” Videgaray told a local TV station.

Trump’s threats to walk away from the 23-year-old free-trade agreement with Mexico and Canada have been made several times before, as part of his objection to the $60 billion trade deficit with Mexico and a loss of manufacturing jobs from parts of the United States. In a phone call with President Enrique Peña Nieto in January, Trump talked about imposing a border tax of up to 35 percent on Mexican exports. During the Group of 20 meeting in Hamburg last month, Trump again reiterated his frustration with NAFTA, according to a Mexican official informed about the meeting between the two leaders.

“We’re all very clear that this is the worst deal in the history of the U.S.,” the official, speaking on the condition of anonymity to be candid, said with a touch of exasperation.

Despite all those warnings, many Mexican business and political leaders remain upbeat about the chances of a deal, including one that might boost trade on both sides of the border and modernize an agreement made in the early 1990s, before the e-commerce age took off.

Juan Pablo Castañon, president of Mexico’s Business Coordinating Council, a coalition of business groups, recently predicted that there was a 90 percent chance of success.

“This is a great opportunity to strengthen the North American region,” said Manuel Herrera, president of the Confederation of Industrial Chambers (Concamin) and a member of an advisory body to the trade negotiators. “We can become even more competitive as a region.”

And yet, many Mexicans acknowledge that risks remain and are wary that the Trump administration could impose unacceptable demands that could hurt booming industries such as auto manufacturing.

“We’ve opened up a huge negotiation process of one of the world’s most ambitious trade agreements on the back of very anti-Mexican” rhetoric from Trump, said the Mexican official, who spoke on the condition of anonymity. “The whole thing is full of not only potholes, but mines, that could derail it at any time.”

One risk is that negotiations could drag on into next year, when Mexico has a presidential election, and the trade talks would get swept up into a more volatile political environment or a new administration that might be less inclined to deal with Trump.

“I believe the very short window of opportunity will be the first quarter of next year, at a maximum,” said Larry Rubin, a Republican Party representative here and president of the American Society of Mexico. Rubin said a deal was still in the best interest of all three countries. “I’m sure they will get to an agreement,” he said.

Even if the upheaval of Trump’s threats to scrap NAFTA amounts to nothing but a slightly tweaked agreement, Mexicans have been made well aware of the risks of relying too heavily on the United States during this period of uncertainty. The feverish effort underway to diversify the Mexican economy and boost trade with parts of South America, Europe and Asia is likely to continue regardless of how NAFTA shakes out. And that could mean fewer trade benefits for the United States, said Benjamin Gedan, who was National Security Council director for Latin America during the Obama administration.

“That is a price we will pay for a generation,” said Gedan, a scholar at the Woodrow Wilson Center in Washington.

The next round of NAFTA talks is scheduled for next month in Mexico City.

23Ago

Mexico offers opportunity, if we don’t mess up NAFTA

agosto 23, 2017 Jesus Aguirre

Mexico’s energy markets offer tens of billions of dollars in opportunities for U.S. energy companies, thanks to a once-in-a-century privatization effort.

But the best chance to take advantage will last only as long as the North American Free Trade Agreement.

Mexico’s oil and natural gas production is down 40 percent from peak levels, forcing the country to import refined petroleum products and natural gas from the U.S., according to a new report from S&P Global Platts, an energy data analysis and consulting firm. Imports of U.S. petroleum products are up 125 percent compared with 2016, and U.S. natural gas imports make up 60 percent of Mexico’s consumption this year, compared with just 22 percent in 2010.

By 2022, the U.S. will supply 70 percent of Mexico’s natural gas supply if current trends continue, Platts analysts predict.

“But the next year may end up being the most critical in determining how successful Mexico has been in dismantling its government monopolies and creating open market conditions,” Platts researchers wrote. The government is at a critical stage in developing markets for trading energy.

Mexico’s government held a monopoly over the nation’s energy sector until Dec. 20, 2014, when President Enrique Peña Nieto signed a law making it possible for private and international companies to explore for oil and natural gas, sell it on a competitive market, to generate electricity and sell it to consumers for the first time since 1936.

Many observers doubted the government could pull off such a feat, particularly on Peña Nieto’s aggressive timeline. But the government has held 11 auctions to sell oil and natural gas exploration blocks, and more energy than ever is flowing into Mexico from outside the country.

The number of gasoline stations in Mexico is expected to double by 2022 as foreign retailers invest $12 billion in the country, S&P Platts reported. The country needs more than $4 billion for new pipelines to meet the needs of a rapidly industrializing country.

U.S. companies have the expertise to help Mexico increase crude oil production, lay the pipes needed to deliver energy, build new electricity generation and make up for any supply shortfall the rapidly growing nation may experience. But all of that relies on the North American Free Trade Agreement, which allows for the free movement of goods and services across our southern border.

“NAFTA has been a big win for the U.S. energy sector, and it has helped create a robust, integrated North American energy market that supports U.S. jobs and strengthens our energy security,” Dennis Arriola, executive vice president of natural gas utility Sempra Energy, told the House Ways and Means Committee.

President Donald Trump, though, has repeatedly called NAFTA the worst trade deal the U.S. has ever negotiated. He won votes in key Rust Belt states by feeding the false narrative that NAFTA let companies move more jobs to Mexico than mutual trade created in the U.S.

Most economists, though, believe that while many rote manufacturing jobs did move to Mexico, increased exports of U.S. goods created more new jobs than were lost.

Trade with Mexico has created tens of thousands of jobs in Texas. While the nation as a whole has a $55 billion trade deficit with Mexico, Texas has an $11 billion trade surplus.

The U.S. trade representative, Robert Lighthizer, opened talks last week to renegotiate the trade deal with Mexico and Canada, and his opening salvo was stark.

We fill like NAFTA has fundamentally failed many, many Americans and needs major improvement,” Lighthizer said.

Mexican and Canadian officials agree that the 25-year-old treaty needs updating, and that’s certainly true. But what’s needed is a light touch, because Mexico’s growing economy and the growing advanced manufacturing sector in the U.S. will likely solve the deficit if fair trade is enshrined in an updated agreement.

Since 2006, Texas exports of goods to Canada and Mexico have risen 71 percent, and exports of services have risen 45 percent. Those numbers will continue to grow if Texas companies can help Mexico rebuild its energy sector under NAFTA.

“Successful negotiations should expand on, and not diminish, the many benefits NAFTA already provides,” said Tom Linebarger, chairman and CEO of engine maker Cummins.

The talks will need to move swiftly to conclude before the Mexican presidential campaign begins in February. That’s going to rely on skilled negotiations.

Blowing up NAFTA to satisfy workers in the Rust Belt, who are never getting their old jobs back, would do tremendous harm to Texas’ economy. Focus on the future’s opportunities, not on the past.

20Ago

Auto groups side with Canada, Mexico on NAFTA origin rules

agosto 20, 2017 Jesus Aguirre

WASHINGTON (Reuters) – Auto industry groups from Canada, Mexico and the United States are pushing back against the Trump administration’s demand for higher U.S. automotive content in a modernized North American Free Trade Agreement.

At talks underway this week in Washington, automaker and parts groups from all three countries were urging negotiators against tighter rules of origin, said Eduardo Solis, president of the Mexican Automotive Industry Association.

But U.S. Trade Representative Robert Lighthizer confirmed the industry’s fears that the administration of President Donald Trump was seeking major changes to these rules to try to reduce the U.S. trade deficit with Mexico.

“Rules of origin, particularly on autos and auto parts, must require higher NAFTA content and substantial U.S. content. Country of origin should be verified, not ‘deemed,'” Lighthizer said on Wednesday in opening remarks.

Mexican Economy Minister Ildefonso Guajardo and Canadian Foreign Minister Chrystia Freeland both said they were not in favor of specific national rules of origin within NAFTA – a position that the industry agrees with.

“We certainly think a U.S.-specific requirement would greatly complicate the ability of companies, particularly small- and medium-size enterprises, to take advantage of the benefits of NAFTA,” said Matt Blunt, president of the American Automotive Policy Council. The trade group represents Detroit automakers General Motors Co (GM.N) Ford Motor Co (F.N) and Fiat Chrysler Automobiles (FCHA.MI).

His comments were echoed by Flavio Volpe, president of Canada’s Automotive Parts Manufacturers Association.

“Anytime you say this list or a part of this list has to come from one specific country you’re going to hurt all three countries,” he said.

The United States had an autos and auto parts trade deficits of $74 billion with Mexico and $5.6 billion with Canada, both major components of overall U.S. goods trade deficits with its North American neighbors — deficits that Lighthizer said could no longer continue.

Lighthizer’s mention of tightening verification requirements is a reference to expanding the parts tracing list, which is used to determine whether companies meet the 62.5 percent North American content requirement for autos and 60 percent for components.

Devised in the early 1990s, the tracing list covers almost none of the sophisticated electronics found in today’s cars and trucks, most of which come from Asia. Putting these on the tracing list could force suppliers to source these components from North America or pay tariffs on them.

Volpe said any changes to this must also capture the North American system design work and software content for these components that is not currently included.

“A car today probably has 25 to 30 percent advanced electronics, software content in it. In 1994, it had zero or 1 percent,” Volpe said. “Could you address the tracing to help you get to NAFTA compliance level by capturing some of the work that’s being done in Silicon Valley or Waterloo, Canada? Yes.”

John Bozzella CEO of the Association of Global Automakers, which represents international-brand carmakers, said NAFTA has allowed a major expansion of auto exports, with more than 1 million more vehicles built annually in the United States than in 1993.

“Negotiators should be mindful of this success as they work to modernize the agreement,” Bozzella said, whose organization represents international brand carmakers with U.S. plants, including Toyota Motor Corp (7203.T), Honda Motor Co Ltd (7267.T) and BMW (BMWG.DE).

15Ago

Mexico unemployment rate hits lowest in 11 years

agosto 15, 2017 Jesus Aguirre

Mexico’s unemployment rate fell to its lowest level in 11 years in the second quarter, the National Institute of Statistics and Geography (INEGI) announced on Monday.

According to the report, the unemployment rate stands at 3.5 per cent of the economically active population (EAP), the lowest level since the second quarter of 2006.

INEGI President Julio Santaella Tweeted that the country had seen a rise of 765,000 jobs year-on-year, with 681,000 in the formal sector and 84,000 employed informally.

Between April and June, 236,000 people found jobs, leaving the total number of unemployed in Mexico at 1.9 million, Xinhua reported.

However, INEGI also reported that 29.5 million people still work informally, meaning they are not working as registered employees and pay no tax.

The Mexican economy is currently growing at a moderate pace, with GDP climbing by 2.3 percent in 2016 and at 1.8 per cent in the second quarter of 2017.

This continued growth will depend largely on how Mexico fares in the upcoming renegotiation of the North American Free Trade Agreement (NAFTA), a free trade agreement with the US and Canada.

11Ago

An issue for upcoming NAFTA talks: Getting Mexicans a pay raise

agosto 11, 2017 Jesus Aguirre

WASHINGTON — The cost of Mexican labour will be an issue in the renegotiation of the North American Free Trade Agreement, participants acknowledged at an auto-industry conference, touching on one of the key sectors up for discussion.

It’s an issue officials from the national governments have been raising in the runup to the talks — the idea that any new agreement should address the ongoing, yawning wage disparity between auto workers in Mexico and their northern peers.

At a Washington gathering organized by the Motor & Equipment Manufacturers Association on Wednesday, the head of an international auto group said he’s prepared for labour to become an issue after talks start this month.

“Labour standards will be part of the negotiation,” said John Bozzella, president and CEO of Global Automakers, which represents major companies like Honda, Hyundai and Nissan.

“I would expect that.”

He demurred on whether he might welcome labour changes, saying he’ll await some details: “Really, that’s a question that requires us to have more understanding of all the elements of the discussion in play. So I can’t really answer that question now. Maybe later in the process.”

The basic issue involves the competitive advantage Mexico enjoys in attracting auto plants — low labour costs in a country whose auto workers take home a fraction of what their peers in Canada and the U.S. do.

Unions peg the average auto-worker wage in Mexico at just over $4 an hour.

This disparity is a pressing priority for some policy-makers. With auto companies preparing to make a historic round of investments in next-generation electric and autonomous vehicles, officials want to guarantee a share for their countries — including Canada, which has seen its proportion dwindle.

The unions describe the wage gap as an immediate priority and have proposed labour reforms including new rules for forming unions. All three national governments have also spoken about labour reforms as an issue for the talks.

U.S. Commerce Secretary Wilbur Ross cited it as a top priority earlier this year in an interview with CNBC. He said the supposed point of NAFTA was to gradually converge living standards between the countries: “That really hasn’t happened on the Mexican side,” he said. “Mexican workers are really not at all better off.”

Soon after Donald Trump’s election win, President Enrique Pena Nieto said he was willing to discuss labour standards.

International data illustrates how Mexican wages have stagnated.

In fact, OECD figures show Mexican average incomes even lower in inflation-adjusted U.S. dollars in 2015 than the $16,000 when NAFTA came into effect. That’s compared with Canada’s average wage, which has grown 38 per cent to more than $48,000 over that same period between 1994 and 2015; U.S. wages grew just under 33 per cent to $59,700 over that span.

But those figures don’t tell the whole story.

A McKinsey report in 2014 argued that Mexico has a two-tier economy: with one benefiting from gains under NAFTA-related manufacturing and another in decline related to more traditional sectors isolated from trade.

Another participant at the Washington conference said it’s complicated. He urged people to note a broader international context; productivity levels, not just wages; and evolving attitudes in Mexican society.

Eric Farnsworth of the Council of the Americas agreed that labour will be a NAFTA topic.

“You’re right. It’s clearly an issue. It has been an issue for some time,” he said when asked about labour reforms.

But he said people looking at Mexico when discussing cheap labour are pointing in the wrong direction. North American workers face the greatest low-cost wage competition from outside their trade zone, he said — not within.

“Mexico is not the low-cost choice. The cost of Mexican labour is a lot higher than Asia or other developing markets,” Farnsworth said.

“The idea that Mexico is some sort of a backward place where labour is viewed, and the environment is, as an afterthought — if it ever was true I don’t think it increasingly is. I think this is clearly a country that has advanced, moved forward, and will continue to do so.

“Not because it’s a part of NAFTA — or because they think the United States wants it. But because their own people are demanding it.”

11Ago

U.S. push for freer NAFTA e-commerce meets growing resistance

agosto 11, 2017 Jesus Aguirre

MEXICO CITY (Reuters) – A U.S. proposal for Mexico and Canada to vastly raise the value of online purchases that can be imported duty-free from stores like Amazon.com and eBay is emerging as a flashpoint in an upcoming renegotiation of the NAFTA trade deal.

Vulnerable industries like footwear, textiles and bricks and mortar retail in Mexico and Canada are pushing back hard against the proposal by the U.S. trade representative to raise Mexican and Canadian duty-free import limits for e-commerce to the U.S. level of $800, from current thresholds of $50 and C$20, respectively.

For the Mexicans, the main worry is that such a move could open a back door for cheap imports from Asia and beyond. For Canadian retailers, the fear is that e-commerce companies will undercut their prices.

The U.S. plan was unveiled in July as part of the Trump administration’s goals to renegotiate the 25-year-old treaty.

While Mexico and Canada are still formulating their responses, Mexico City is leaning strongly against the proposal in its current form, and Ottawa may not be far behind.

The proposed $800 level “opens a completely unnecessary door” to imports from outside the NAFTA trading bloc, Mexican Economy Minister Ildefonso Guajardo said on Thursday on the sidelines of a NAFTA-related event, calling it “a very sensitive topic.”

The growing controversy over how to account for a burgeoning regional e-commerce sector dominated by the United States highlights a rare area where the Trump administration is pushing to liberalize trade rules rather than tightening them.

Much of Trump’s criticism of NAFTA stems from his belief it has decimated U.S. manufacturing as companies shifted production to Mexican factories with cheaper labor, creating a U.S. trade deficit with Mexico worth more than $60 billion.

TOP PRIORITY

But Mexican and Canadian business leaders fear the rule change could make their industries vulnerable, arguing that unless online retailers can show products are made in North America, they should not be exempted from duties levied on other imports.

“We can’t open the door to inputs from outside the region coming in tax-free when we’re talking about the need to reduce the deficit and create jobs,” said Moises Kalach, who fronts the international negotiating arm of Mexico’s CCE business lobby. “It goes completely against that.”

Guajardo said Mexico’s retail group the National Self-service and Department Store Association, which includes powerful members such as Wal-Mart de Mexico, had visited him last week to express concerns about the proposal.

He said the group’s representative brought to the meeting a $250 jacket bought on the internet as evidence that violations to the existing limit were already threatening members’ businesses.

“Suppose there was an $800 free limit. Can you imagine how many shirts Vietnam could send to Mexico in a packet below that price? They could easily flood us with packets of 100,” he said, while recognizing the need to smooth customs processes.

Complicating efforts to agree on a common set of rules is a tangle of diverging regulations on tax and how the restrictions on imports differ in the region depending on whether they enter by air, sea or land.

Amazon.com Inc and eBay Inc declined to comment for this story.

eBay has previously said it supports an increase to Canada’s low-value customs ‘de minimis’ threshold for ecommerce to promote seamless access to the global marketplace.” Increasing the threshold “absolutely” is eBay’s top priority in the NAFTA renegotiation, a person familiar with the matter said.

Canadian opposition is being led by retailers, whose industry association said it was concerned about “the behavioral shift that would inevitably result if shoppers can buy a far wider range and higher value of goods tax-free and duty-free.”

The Retail Council of Canada said in a submission to the government that clothes, books, toys, sporting goods and consumer electronics would be among the items most affected, and expressed confidence Ottawa would fend off such requests.

NOT FROM OTHER NATIONS

“eBay in particular has lead this charge to three different finance ministers in a row – Jim Flaherty, Joe Oliver, and Bill Morneau – and in each case they have failed,” said Karl Littler, a spokesman for the Retail Council of Canada.

“The U.S. raised this quite frequently in the TPP (Trans-Pacific-Partnership trade) round and they also failed to secure this concession,” he added.

There have been hints from Canada’s government about a compromise under which a higher limit would exempt products ordered from e-commerce from duties but not sales taxes.

“When it comes to waiving duties and taxes, we need to carefully consider the impact that would have on Canadians and on Canadian businesses,” said Chloe Luciani-Girouard, a spokeswoman for Morneau.

Mexican firms could accept a higher import limit for goods produced in the NAFTA region – but not from other nations, said Alejandro Gomez Tamez, executive president of the Chamber of Commerce for the footwear industry in the central Mexican state of Guanajuato, a hub of textile manufacturing.

“When a product comes in, even if it’s packaged and sent from the United States, if it’s from a third country, it should pay duties,” he said.

09Ago

Canada v Mexico: Trump seeks to divide and conquer in Nafta negotiations

agosto 9, 2017 Jesus Aguirre

The rhetoric against a neighbouring country dominated Donald Trump’s presidential campaign: a billion-dollar wall, a crackdown on immigration, and a steep border tax. Yet when Trump fired the opening shot in his trade war, it was aimed not at Mexico – but at Canada.

First came an average 20% tariff on Canadian softwood lumber. Months later the Trump administration piled another tariff of nearly 7% on the sector.

Trump launched a broad attack on several sectors north of the border. “Canada, what they’ve done to our dairy farmworkers is a disgrace,” he told reporters. “We can’t let Canada or anybody else take advantage and do what they did to our workers and to our farmers … included in there is lumber, timber and energy. So we’re going to have to get to the negotiating table with Canada very, very quickly.”

The sharp reversal – a few months earlier Trump had characterised the US-Canada relationship as “outstanding” – came as a surprise to many.

“Step aside, China and Mexico: Canada is now Donald Trump’s whipping-boy du jour on trade,” said the Canadian Press, while Politico offered their thoughts on why president had not gone after Mexico first: “Canada is an easy target and doesn’t have as many weapons to fight back.”

Others said it was long overdue. “Canada was getting a free ride,” said Federico Estévez, a professor at the Autonomous Technological Institute of Mexico. “All of the fire was headed south of the US border – so Canada was getting off easy.”

Estévez pointed to the looming renegotiations of the North American Free Trade Agreement to explain the turnaround. “I think Trump understood something basic, which is that the US will not be able to tweak Nafta or rework it unless it splits up Canada and Mexico and makes Canada squirm just as well,” he said. “You want to open up some battlefronts – and that’s what he’s effectively done, to the surprise of everybody.”

With the renegotiations slated to begin on 16 August, all of the interactions of past months – from pleasantries to attacks – are again under the microscope. Against a backdrop of grievances over trade deficits and protectionist policies, officials in both Canada and Mexico are also scrambling to shore up strategies to best handle a president who ranks among the more unpredictable elements of the upcoming negotiations.

Both countries have much at stake. Canada sends about three-quarters of its annual exports to the US while nearly 400,000 people a day cross the shared border. In Mexico, some 80% of exports end up in the US.

Mexican and Canadian officials have been laying the groundwork for months. Trudeau’s inner circle have fostered close contacts with the Trump administration, while representatives from Canadian government and business have been criss-crossing the US to reinforce how Americans benefit from their relationship with Canada, said Colin Robertson of the Canadian Global Affairs Institute.

“There have been, I think, 170 visits by Canadians to the States since January. And not just to Washington but also into Trump territory,” he said. “And it’s not just ministers, it’s legislators and premiers and provincial legislators.”

The aim, said Robertson, is to mitigate what he described as Trump’s “situational politics”, which see the president shift stances depending on the audience he’s addressing. He pointed to Trump’s swipe at Canadian dairy as an example, as it came while the president addressed an audience in Wisconsin.

In Mexico, the job of managing relations with the Trump administration has fallen to Luis Videgaray, a foreign minister whose experience in the world of finance has overlapped with Trump’s son-in-law Jared Kushner.

Despite initial setbacks – Trump signed an executive order to build the border wall and tweeted that Mexico would pay for it even as Videgaray was heading to Washington to meet with Kushner – the minister and his small team have earned some plaudits as the threat of Trump has apparently diminished for Mexico and the peso bounced back after a Trump-inspired slump.

So far, Mexico’s strategy for handling Trump seems to lie in trying to save some provisions of Nafta at all costs, such as investor protections, analysts say.

The government closed online consultations late last month, though it has attracted criticism for appearing to pay closer attention to the country’s big business elite while ignoring the interests of smaller firms and beleaguered workers.

“I’ve not read the national interests of Mexico spelled out,” said Carlos Heredia of the Centre for Research and Teaching of Economics. “There hasn’t been any sort of open consultation – the online consultation is sort of a joke – but there’s nothing saying, ‘We are going to represent the national interest of Mexico, not just the top echelons of business and politics.’”

Mexico released its objectives for Nafta negotiations last week. It joined Canada in opposing US plans to eliminate dispute resolution mechanism known as Chapter 19, but also will propose anti-graft initiatives and provisions for small business and the digital economy. Energy will also be on the table as Mexico approved a reform to open its oil industry in 2013.

From immigration to the environment, Trump’s political stances – widely despised in both Mexico and Canada – could colour discussions at the negotiating table, raising questions of how America’s neighbours will respond.

While Trudeau’s approval ratings remain high, suggesting many Canadians are comfortable with his reluctance to chastise Trump,Mexico’s Enrique Peña Nieto is even more unpopular than the US leader – and his apparent unwillingness to talk tough with Trump is widely as a weakness.

“The greatest problem of the Mexican response to Trump has been that the Mexican government has acted over and over again as if the constituency of its foreign policy were only one person: Donald Trump,” said Carlos Bravo Regidor of CIDE. “This has left it open to vulnerabilities, the most of important of which is an inability to voice the legitimate grievances Trump causes many regular Mexicans.”

Despite their differences, Trump has demonstrated a level of cordiality and friendship with Trudeau, said Laura Dawson, who heads the Canada Institute at Washington’s Wilson Centre.

“It’s kind of funny in the tweets that I’ve been reading. When he’s talking about his two neighbours, he calls them, Justin and the Mexican president,” she said. “I don’t know if he doesn’t know Trudeau’s last name, I don’t know if he knows Peña Nieto’s name at all – but its always Justin and the Mexicans.”

What’s certain is that Canada and Mexico now realise they’re in it together. “There was some public opinion, at least in Canada, that we could go at it alone, without Mexico because they’re in the crosshairs and we’re not. I think that that sentiment has really subsided,” said Dawson, pointing to official statements from both countries that reiterate the importance of the trilateral agreement.

While Trump has gone after both neighbours, he’s also demonstrated that he’s open to changing his mind on things, said Dawson.

“He’s willing to find a parade and get in front of it, so I think that if Canada and Mexico are skillful enough about giving the president some wins that he can claim – you know, modernisation of the agreement, certain things that affect labour or manufacturing – I think they can also move ahead on the modernisation agenda on the Nafta.”

08Ago

Toyota to Produce Pickup Trucks and SUVs in Mexico

agosto 8, 2017 Jesus Aguirre

TEMPO.CO, Jakarta – A manufacturing company originally from Japan, Toyota Motor Corp. plans to produce pickup trucks and sport utility vehicles (SUVs) at a new plant located in the Mexican state of Guanajuato.

“We will concentrate only on pickup trucks in the beginning, and are studying the potential of SUVs in the future,” said Luis Lozano, a spokesman for Toyota Mexico, as quoted by Reuters on Sunday, August 6, 2017.

Lozano said the plan for now is that the company will assemble Tacoma truck models. As for the SUV model, it is still in the learning stage.

Both models are indeed quite lucrative products for the North American market. Trucks and SUVs account for about 65 percent of the market in North America.

This decision was taken when Toyota took a 5 percent stake from Mazda Motor Corp. as part of its second alliance to set up a factory in the United States with an investment value of $ 1.6 billion.

The investment value incurred by the company in the region will be the same although there will be a change of plan. “The investment we counted when announcing the decision to set up a plant is worth USD 1 billion,” said Lozano.