When President Donald Trump announced a trade pact
with Mexico to replace the North American Free Trade Agreement,
attention immediately turned to Canada. But it’s in China – which wasn’t
mentioned – that the greatest impact could be felt.
In abandoning
Nafta, the U.S. appears to be moving toward a single trade bloc that
might also embrace Canada. The Mexico accord tightens rules of origin on
automobiles, so that 40 percent to 45 percent of their content must be
made by domestic companies whose workers earn at least $16 an hour. This
limits the scope for assembly in Mexico with Chinese components,
favoring higher-value parts from manufacturers covered by the agreement.
The origin requirement is clearly aimed at
countries that either trans-ship or use Mexico as an assembly
center. The announcement says the “new
rules will help ensure that only producers using sufficient and
significant United States and Mexican parts and materials receive
preferential tariff benefits.” Taken with certification for local
producers and particular rules for textiles, it does look as if the
draft had China partly in mind.
Other aspects appear to target concerns about China more directly. The section on intellectual property
addresses national treatment of copyrights, clauses on common names and
trademark protection – all long-standing U.S. issues with Beijing. As
anyone who has walked through a Chinese street market knows, lookalike
versions of famous brands, and thousands of “Apple” stores, are
commonplace.
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