The US suggested new trade agreements with Mexico and Canada can be reached within weeks — but there are still major sticking points to a new NAFTA deal.
The US, Canada, and Mexico are approaching their eighth round of talks on NAFTA. Vice President Mike Pence said Saturday that a modernized agreement could be ready within several weeks — but some think that's very unlikely.
"Given the complexity of the issues at stake, we have our doubts about whether such a rapid conclusion to the discussions is possible," analysts at HSBC said Monday. "NAFTA negotiations likely to drag into the second half of 2018."
So, what's the hold up? Here's a breakdown of the major issues still standing between the three countries and a modernized NAFTA deal.
1. Tariffs on cars
Under the current agreement, 62.5% of a car's parts must be from the US, Canada, or Mexico in order to be exempt from tariffs. The US wants to increase that quota to 75% for larger auto parts like transmissions and engines.
Additionally, it would incorporate auto production wages into the equation. The Trump administration wants wages above the North American industry average to count toward meeting the content requirement.
2. Companies suing foreign governments
This provision allows companies doing business in other countries to sue governments for alleged violations of investment protections. Canada — who has been sued twice as often as the US and Mexico under the agreement — wants it reformed to give "unassailable right to regulate in the public interest" without risk of an appeal.
It's unclear whether the US would be open to that. More than 100 congressional Republicans said in a recent letter to US Trade Representative Robert Lighthizer they wouldn't support its removal. But Lighthizer, along with the US's largest federation of unions, AFL-CIO, says it facilitates offshoring and creates an unnecessary set of benefits for multinational firms.
3. Anti-dumping disputes
Another dispute-settlement mechanism sends complaints of so-called dumping — a term for a country pouring an underpriced good into a foreign market — before a panel of independent trade experts, instead of in domestic courts.
Canada, who has dealt with multiple dumping and countervailing investigations in just the past year, is concerned they could get held up in years of US litigations without it. The US wants it to be optional.
4.Buy American policies
The US wants to extend the reach of so-called Buy American policies that limit foreign bidders from getting in on federal public-works projects. The current agreement sets the limits on these deals, known as government procurement contracts, relative to the market size of a country.
US Commerce Secretary Wilbur Ross has said he instead wants a dollar-for-dollar approach, capping the combined value of contracts to Canada and Mexico at what those countries leave open to the US. But that idea doesn't go over so well with Canada and Mexico, who have significantly smaller economies and populations.
5. Import duties from produce to pork
Canada's supply management system includes hefty duties on dairy, eggs, and poultry. The US wants to knock those tariffs and quotas down, but going that direction has been a non-starter for Canada.
The issue is politically charged on both sides — Canadian officials have vowed to uphold protectionist policies, while US farmers have been pushing the Trump administration tear them down.
The US and Mexico are also in a standoff on duties. US officials have suggested taxing Mexican produce exports. A tit-for-tat response is possible, with Mexico mulling a proposal to slap duties on US pork.