Here's how NAFTA talks are going according to an auto insider
Friday, February 23, 2018
President of Canada's Automotive Parts Manufacturers' Association gives his insights into the dealings
There have been six formal rounds of negotiations between Canadian, Mexican and American officials about NAFTA but it's still not clear what a new trade deal will look like or how it might affect the auto industry in Ontario.
Flavio Volpe is the president of Canada's Automotive Parts Manufacturers' Association. He was the keynote speaker at a panel discussion held on Wednesday at the Ciociaro Club in Windsor, Ont.
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A crowd of business leaders gathered there to discuss the state of the NAFTA talks and how to move forward with or without the U.S. and partnerships with Mexico.
What's happened so far
Volpe has been following the talks very closely, and offered his insights on what he has seen.
"I was very worried for a while there in the late fall when the Americans presented a proposal that said 50 per cent of everything made in North America has to come from the U.S.," said Volpe. "I was specifically concerned about the affect that would have on this region."
In the rounds of discussions that came after that proposal by the U.S., Canada countered by offering concepts to get the country away from American protectionism, said Volpe.
Even after that offer was put forward, Canada's negotiating team and the Minister of Global Affairs decided to stay at the table.
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"Instead of rejecting the proposal outright, we spent the next month or so explaining to the Americans that if we had accepted their proposal the biggest loser would be American assemblers in Canada and Mexico," said Volpe. "Once they saw that, there was a real softening."
n January, a new framework was put forward said Volpe.
"I'm quite positive that that framework has got momentum in all three countries," said Volpe, adding that talks continue in Mexico next week.
U.S. President Donald Trump has threatened to completely tear up the deal on numerous occasions. Something Volpe said would be bad for all three countries.
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"He's probably in direct contact with the big American three assemblers but he's certainly heard from the auto sector across they country and what they said was 'We need Canada and Mexico to compete against China and the Europeans and the Japanese,'" said Volpe.
Volpe said all three countries are part of an important formula that all major auto jurisdictions use. Mexico is a low-cost area of work that helps keep the North American market competitive against other auto makers.
What happens next
If NAFTA is changed and sales in the U.S. become more difficult, Volpe said Canada would have a difficult time selling vehicles or parts to other countries.
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"If you're going to sell a car in Japan you have to send it there by boat and vehicle and set up a distribution channel in that country. By the time you do all those things you've incurred logistics costs," said Volpe, explaining that local prices would be much better given the extra costs.
"We really need the American market, the Americans really need us."