The Trump administration has made another demand that could destroy NAFTA talks, this time unveiling a protectionist auto manufacturing proposal considered outlandish and unpalatable by Canada, Mexico, unions and car companies.The new U.S. proposal creates yet more pessimism about the chances for a successful renegotiation of the continental free trade pact. It is the second major U.S. proposal in two days that Canada and Mexico are unlikely to even consider endorsing. The latest proposal has experts wondering again whether the Trump team is making unrealistic demands as a bargaining ploy or whether the president who has threatened to terminate NAFTA is deliberately trying to sabotage the negotiations.“I think it’s one of these poison pills. I just think there’s no way, at all, ever, not-no-how, that Mexico and Canada can accept it. I don’t know what they’re thinking. The auto industry hates this,” said Jon Johnson, a C.D. Howe Institute senior fellow who worked on auto issues during the negotiation of the original North American Free Trade Agreement.The long-rumoured proposal, discussed at NAFTA renegotiation talks on Friday, would make a car need to be composed of 50 per cent American content to avoid tariffs. At present, there is no American-content rule: NAFTA requires only that a car include 62.5 per cent content from North America as a whole.The U.S. also proposed to raise that North American requirement to 85 per cent. This, too, is considered an unreasonable threshold by the industry given the importance of Asian electronics and other elements found overseas.Further, the timeline proposed by the U.S. was extraordinarily aggressive. Companies would have just one year to meet the 50 per cent U.S. requirement, two years to meet the 85 per cent North American requirement — an unusually rapid implementation period for an industry in which it takes years for companies to turn an idea into a product.The proposal for 50 ...
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