Mexico is open to compromise on the key NAFTA issue of vehicle manufacturing though it was unclear if the flexibility was enough to reach a deal with the US and Canada, a news agency report said.
Multiple Bloomberg sources said Mexico was willing to raise North American automotive content to 70% in talks in Washington on Monday and Tuesday, the first time it had suggested a level.
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That was up from the current 62.5% but it was not clear if that would be enough for an agreement because the US has been calling for 75% for the biggest car components, Bloomberg said. Mexico was also seeking to implement the changes more slowly than the US wants, over a decade, the news agency's sources said.
According to the report, Mexican negotiators rejected a US demand almost half of every car be built by higher paid workers but the sources said there was still some room for using a level of higher wage production as a way to meet new NAFTA content criteria.
Bloomberg noted setting wages through NAFTA was controversial in Mexico's auto industry while its sources said the Mexican proposal included no wage targets.
US proposals have been oriented around increasing Mexican salaries and providing incentives for automakers to either move production back to America or at least stop investing so much south of the border, the report said.
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By GlobalDataThe US wage proposal "is likely to price Mexico out of the market – by all accounts, Mexican negotiators are well aware of that", Phil Levy, a senior fellow at the Chicago Council on Global Affairs, said in an interview with BNN Bloomberg television. "And that doesn't actually help any of the North American producers so it doesn't seem like a terribly viable strategy."
Bloomberg sources said Mexico responded to US demands on steel, aluminium and wages by saying cars would have to essentially check off a box on one of the three issues.
Mexican economy minister Ildefonso Guajardo told Bloomberg the Mexican auto proposal was discussed in a bilateral meeting with the US on Tuesday.
"We are trying to accommodate the different positions" on autos, he said. "But again, autos is only one of many items."
Bloomberg said the Mexican proposal on wages fell short of what the US has reportedly sought. The Trump administration has been proposing that 40% of a car, and 45% of trucks, be made by workers earnings wages of at least US$16 per hour, Mexico automobile association President Eduardo Solis has said.
His group has said that proposal is unworkable.
