Big US NAFTA demands

Photo: The Canadian Press

NAFTA talks have now entered their most difficult phase with the United States beginning to drop its bombshell proposals on the negotiating table at a just-begun fourth round outside Washington.

U.S. officials had foreshadowed that this week-long round would see the most contentious discussions open and that is coming to fruition, with the American side levelling one demand deemed a non-starter — and preparing to deliver another one.

The just-released demand would create a so-called termination clause. It would end NAFTA after five years, unless its member countries explicitly opted to renew it. That proposal was delivered late Wednesday night.

That comes after the U.S. proposed far stricter Buy American rules at the last negotiating round, and in the leadup to one of the most important proposals of the entire negotiation: on rules for auto parts, which could come as early as Friday.

''More contentious issues will be coming up very shortly,'' U.S. Commerce Secretary Wilbur Ross said during a panel discussion this week at the Dentons law firm.

The other NAFTA countries say they're legitimately baffled by where the U.S. is headed.

Sources say others are trying to figure out what this hardline approach signals from the U.S. — opening positions that will be flexible with some bargaining; hard demands; or a desire to poison the talks, let them collapse, and simply do away with NAFTA.

Some allies of President Donald Trump are more positive.

Newt Gingrich said this week he sees little appetite within the U.S. cabinet for the type of turmoil cancelling NAFTA might cause. He said Trump's team is filled with wealthy pro-traders, who simply believe the U.S. needs tougher deals.

Canada and Mexico are vehemently opposed to the five-year termination idea, seeing it as a destabilizing investment-killer and an unacceptable red line. Canada's ambassador to the U.S. has joked that if the same idea were used in marriage licences, the divorce rate would skyrocket.

The next big scare could come Friday the 13th.

That's when the group handling rules for auto parts meets for the first time in this round, and it's expected the U.S. is preparing to level demands viewed as non-starters by Canada, Mexico, and the auto industry.

One report said the planned demand would require 85 per cent of a car's parts to come from North America, and half of them to come from the U.S.