Mexico and Canada aim to finish reworking less contentious chapters of the NAFTA trade deal with the U.S. in new talks that began on Sunday, hoping to clear the path for a breakthrough on the toughest issues before upcoming elections.
This story by Reuters appeared in Automotive News Canada.
In six months, negotiators have ground out progress on the technical details of a revamped North American Free Trade Agreement but made little advance on the most radical demands made by the administration of U.S. President Donald Trump.
Ranging from demands for major changes to automotive content rules and dispute resolution mechanisms, to imposing a clause that could automatically kill NAFTA after five years, the chief stumbling blocks laid by the White House look unlikely to be removed in the latest Mexico City round, officials say.
But if the three negotiating teams manage to iron out remaining differences on areas of broader consensus, officials hope the political leaders will turn their attention to brokering a compromise on the trickiest U.S. proposals.
A schedule for the round showed that the discussions would include rules of origin for the first three days, an issue at the heart of the Trump administration’s demand to raise the amount of auto content sourced from the NAFTA region.
Under NAFTA, at least 62.5 percent of the net cost of a passenger car or light truck must originate in the region to avoid tariffs. Trump wants the threshold raised to 85 percent.
Mexico’s Economy Minister Ildefonso Guajardo has said his negotiating team aims to present a proposal on rules of origin, though he has not provided details.
Any final agreement would need to be reached between Trump and auto sector bosses in the U.S. who oversee the NAFTA region, an industry source close to the process said.
The North American auto industry has pushed back against Trump’s demands, arguing it would damage competitiveness and regional supply chains.
Mexico aims to build on the previous round in Montreal, when Canada floated proposals to address U.S. demands, including one to include costs for engineering, research and development and other items in the total value of an auto.
The schedule showed that several chapters which negotiators have signaled are close to concluding, including e-commerce, telecommunications and energy, are up for discussion towards the end of the round. Financial services will last for three days.
The latest round comes amid flare-ups between Washington and Ottawa and growing, if cautious, optimism in Mexico that the trade agreement will remain.
