NAFTA negotiations set to begin - BBH

Analysts at BBH note that the fourth round of the NAFTA negotiations is set to begin from today.  

Key Quotes

“Although some progress had been reported in earlier rounds, there is a sense of foreboding about the new round, which will discuss domestic content rules that will prove very controversial. Ironically, the US is pushing for a higher minimum wage in Mexico, and Canada wants better labor rights in the US.”  

“Reports suggest the US is arguing that 85% of vehicles must be made in NAFTA countries to count and up to as much as 50% must originate in the US.  Such a demand, coupled with the push for a "sunset" clause (which would end NAFTA at some future date unless explicitly endorsed by all three countries) is seen as part of the "poison pill" strategy, according to the Chamber of Commerce.  The idea is that although Trump backed off from his threat to leave NAFTA, his Administration's demands will not produce an agreement.”

“The US Congress will ultimately have to ratify the final agreement.  Just like the White House stance spurred a bipartisan response from Congress regarding sanctions against Russia, North Korea, and Iran, there seem to be bipartisan efforts to resist a disruption of supply chains and trade relations.  This is part of the check and balances, which, at least up until now.”