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Tensions Rise with NAFTA Talks


President Donald Trump said on Wednesday he would be open to doing a bilateral trade deal with Canada but not Mexico if talks between the three countries over the North American Free Trade Agreement fall apart.

This story by Roberta Rampton and David Ljunggren appeared in Automotive News.

The U.S. Chamber of Commerce on Tuesday accused Trump’s administration of trying to sabotage the talks with “poison pill proposals,” including demands for more favorable treatment for the U.S. side on car production, and a “sunset clause” to force regular negotiations.

Trade experts say the NAFTA talks are likely to stall in the face of aggressive U.S. attempts to sharply increase content requirements for autos and auto parts. People briefed on U.S. proposals to be presented this week said Washington is seeking to sharply lift North American content threshold in car manufacturing.

The proposals call for North American content overall to rise to 85 percent from the current 62.5 percent. In addition, the U.S. wants to add a new 50-percent U.S.-specific content requirement, something that was not in the earlier agreements.

The U.S. side sees strengthening the rules of origin for the auto industry as a way to bring back automotive production and jobs from Asia. Mexico strongly opposes such a move, which would damage its own car industry.

The difficult issue of rules of origin will be addressed mostly at the end of the current talks, according to a schedule obtained by Reuters. The negotiations were extended on Wednesday by two days to Oct 17.

In his meeting with Trump, Trudeau was expected to remind the president that Canada is the U.S.’s biggest export customer, with largely balanced two-way goods and services trade, and is not the cause of U.S. manufacturing jobs lost under NAFTA, Canadian officials said.

Mexican Foreign Minister Luis Videgaray warned that an end to NAFTA would mark a breaking point in U.S.-Mexican relations and affect bilateral cooperation in non-trade areas.

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