WASHINGTON — The auto industry is expected to be in negotiators' crosshairs as preparations speed up to renegotiate the North American Free Trade Agreement and fulfill President Donald Trump's promise to bring production jobs back to the U.S.
U.S. Trade Representative Robert Lighthizer notified Congress in May of the administration's intent to renegotiate the pact, triggering a 90-day consultation period.
With the talks likely to focus on a mix of complex, technical issues and some more politically charged ones, trade experts are warning auto companies to develop action plans to deal with changes that could alter supply networks that have been in existence for a quarter century.
A stated objective of the White House's agenda is to reduce trade deficits, such as the $60 billion gap with Mexico. For that, administration officials have zeroed in on tightening NAFTA's rules of origin, which dictate the amount of North American-made parts that must be used in manufactured products, such as vehicles, to qualify for duty-free status.
"Lighthizer and Secretary of Commerce Wilbur Ross believe auto rules of origin likely contribute to that deficit, so they want to look at whether tightening them is a solution," said David Hamill, a trade attorney and partner at the firm Arent Fox.
Hamill cautioned U.S. importers to expect greater scrutiny from U.S. Customs on shipments that claim to qualify for NAFTA benefits, as a logical outgrowth of Trump's "fair trade" approach. The government can ratchet up enforcement anytime, independent of negotiations.