A fifth round of negotiations on rules governing NAFTA trading relations get underway today, with participants focused on arrangements for automotive trade between member countries.
US President Donald Trump strongly criticised NAFTA during his election campaign and has threatened to introduce border taxes for companies using Mexico as a low-cost manufacturing base for exports to the US. Commentators have suggested that a renegotiation of the agreement is more likely than a US withdrawal, but the US is likely to pressurise Mexico over rules applying to trade – especially those governing large automotive shipments.
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Reuters reports that a Mexican government official told the news agency Mexico will respond to US demands for changes in content rules for autos.
The latest (fifth) round of talks to overhaul the North American Free Trade Agreement starts today (Wednesday, 15 November) in Mexico City.
Reuters notes that the US side will demand a 50% percent minimum US limit (and 85% NAFTA content; 62.5% at present) in NAFTA automobile content that qualifies for free circulation. It also wants the scrapping of a key dispute mechanism and inclusion of a 'sunset clause' that will terminate the trade pact after five years if it is not renegotiated.
Mexican negotiators are expected to ask for more detail on content limits and the capacity of the industry to meet them, in this round of talks.
