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Mexico is said to consider US car proposal for NAFTA to be unworkable

Eric Martin, Bloomberg News on

Published in Automotive News

MEXICO CITY ––The Mexican government views the U.S. proposal for tightening content rules for car manufacturing under the North American Free Trade Agreement as likely to cause serious damage to the North American auto industry, said a person familiar with the nation's position.

Mexico hasn't prepared or presented a counterproposal because it sees the problem as going beyond the specific levels sought by the U.S. and thinks the entire concept is unworkable, said the person, who spoke on the condition of anonymity to discuss private meetings.

The Trump administration has proposed major changes to NAFTA's auto rules, introducing a requirement that 50 percent of parts or vehicles be U.S.-made, and increasing the minimum amount of regional content needed to 85 percent from 62.5 percent. The U.S. auto industry has pushed back against the idea, and more than 70 House Republicans and Democrats also opposed it in a recent letter.

President Donald Trump has threatened to withdraw from NAFTA, which he blames for hundreds of thousands of lost jobs in U.S. manufacturing, if he can't renegotiate the deal. Mexico, Canada and the U.S. started talks in August and plan to continue them until at least March.

At the current round of talks in Mexico City, which lasts until Tuesday, U.S. negotiators have given no indication that they're willing to compromise on their proposal for a mechanism that would automatically end NAFTA after five years, the person said. Mexico and Canada have said they're willing to review NAFTA every five years as long as the evaluation doesn't lead to automatic termination.

The U.S. proposed the automatic termination provision at the negotiating round in Washington in October. In updated U.S. negotiating objectives released Friday, the U.S. referred to "a mechanism for ensuring that the parties assess the benefits of the agreement on a periodic basis" but didn't specify any proposal for automatic termination. That raised speculation the U.S. may be abandoning the demand.


The U.S. Trade Representative's office declined to comment when asked whether the U.S. had withdrawn its proposal for an automatic termination mechanism within NAFTA.

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