The exemption will give U.S. Trade Representative Robert Lighthizer increased leverage in his efforts to close the NAFTA loophole.
It is still highly doubtful the amount of money in the steel and aluminum tariff aspect is close to enough to get Canada and Mexico to agree to close the backdoor loophole.
The Loophole:
Why deal with the U.S. when you can just deal with Mexico, and use NAFTA rules to ship your product directly into the U.S. market?
This exploitative approach, a backdoor to the U.S. market, was the primary reason for massive foreign investment in Canada and Mexico.
This loophole was the primary reason for U.S. manufacturers to relocate operations to Mexico.
If you understand the reason why U.S. companies benefited from those moves, you can begin to understand if the U.S. was going to remain inside NAFTA President Trump would have remained engaged in TPP.
As soon as President Trump withdrew from TPP the problem with the Canada and Mexico loophole grew. All corporations from TPP nations would now have an option to exploit the same NAFTA loophole.
Why ship directly to the U.S., or manufacturer inside the U.S., when you could just assemble in Mexico and Canada and use NAFTA to bring your products to the ultimate goal, the massive U.S. market?
It is against their interests to remove it. Knowing it was against their interests President Trump never thought it was likely Canada or Mexico would ever agree. But he was willing to explore and find out... hence the 'negotiations'.
However, with Canada now joining TPP it has become impossible for the U.S. to remain in NAFTA and simultaneously conduct trade negotiations with TPP nations.
President Trump, Commerce Secretary Wilbur Ross, White House Trade Adviser Peter Navarro and U.S. Trade Representative Robert Lighthizer well understand this structural problem. ONLY Trump, Ross, Mnuchin and Lighthizer are willing to confront this problem.
The issue of Canada and Mexico making trade agreements with other nations (especially China), while brokering/leveraging their NAFTA position with the U.S. as a strategic part of those agreements, is a serious issue that cannot adequately be resolved while the U.S. remains connected to NAFTA.
https://theconservativetreehouse.com...-negotiations/
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