Efforts to reach agreement on a revamped North American Free Trade Agreement by Thursday might be a bit overly optimistic.
U.S. House Speaker Paul Ryan said last week that the details of a deal would need to get to Congress by then for a vote to happen this year, but it’s not clear that time frame is realistic.
Experts note that the negotiators for the United States, Canada and Mexico remain far apart on key issues, particularly involving the automotive industry.
The logistics become even more complicated because, as Bloomberg reported, those officials are not scheduled to meet in person this week. The effect is to add uncertainty to one of President Donald Trump’s key pledges — to remake NAFTA.
During an automotive roundtable with automakers at the White House last week, Trump mentioned the effort to renegotiate the deal, saying, according to a copy of his remarks, that “NAFTA has been a horrible, horrible disaster for this country. And we’ll see if we can make it reasonable.”
But the stakes are high, with estimates that tens of thousands of U.S. automotive-related jobs could be at risk if NAFTA implodes.
Jeff Schott, a senior fellow at the Peterson Institute for International Economics, however, said getting a deal done quickly is not the most important consideration.
“There’s an interest in having the current Congress vote on it because there’s uncertainty about the composition of the next Congress and the leadership of the next Congress, but you know, when push comes to shove, what’s important is you get the right agreement … and if that means you have to work a little more, then you take your chances with the Congress,” Schott said. “If it’s a better agreement, you should have a better chance of getting congressional approval.”
Schott said it appears Ryan and others are trying “to just basically give a kick in the pants to the negotiators to try to get them to accept some of the U.S. proposals.”
Ryan’s push for a deal this week relies on a timeline laid out under so-called fast-track trade requirements, which allow for a vote in Congress without amendments.
One of the more contentious issues in the negotiations involves a U.S. push to require a certain amount of vehicle content be made by higher-wage workers, which effectively excludes Mexico.
But Kristin Dziczek, director of the Industry, Labor and Economics Group at the Center for Automotive Research in Ann Arbor, said every automotive-producing region has a low-cost area. It’s part of being competitive. It’s also what makes vehicles affordable in this country.
“Our exports would be much more expensive if we didn’t have that low-cost content. Our consumer prices will be much more expensive,” she said.
Dziczek said NAFTA, which has been in place since 1994, does need to be updated. Vehicle content now includes extensive use of software and electronics, areas that have changed substantially in the ensuing years, for instance. But a deal that simply makes it “more difficult to make things in Mexico does not necessarily bring manufacturing back to the U.S.”