Mexico is open to changes to vehicle rules of origin as negotiators attempt to update the 1994 North American Free Trade Agreement (NAFTA).

Under the current NAFTA, at least 62.5% of the net cost of a passenger car or light truck must originate in the US, Canada or Mexico to avoid tariffs. President Donald Trump’s administration wants the threshold raised to 85% with half the content made in the US, Reuters reported.

Go deeper with GlobalData

Premium Insights

The gold standard of business intelligence.

Find out more

According to the news agency, Mexican economy minister Ildefonso Guajardo said, while Mexico’s automotive industry has expressed the desire to keep the current 62.5% regional requirement, “I have talked with them. I think we have to be realistic.

“I believe that North America can rethink the model … And I think it’s logical. Let’s be totally honest.”

The report added Eduardo Solis, head of Mexico’s main vehicle industry lobby group AMIA, had suggested not changing rules of origin, saying he needed to ensure North America’s vehicle industry remained competitive.

See Also:

But Trump’s trade chief rejected a Canadian compromise plan to include expenses for engineering, research and development and other high value work to be counted in higher targets for North American content with the aim of safeguarding high paying jobs in the region. Mexico called it “innovative”, Reuters noted

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

Guajardo said the plan “deserves a deeper analysis to try to rescue from it all that is technically valuable”. He added it was predictable US trade representative Robert Lighthizer would deem the proposal unacceptable.

According to Reuters, Flavio Volpe, president ‎of the Toronto based Automotive Parts Manufacturers’ Association, suggested Lighthizer’s tough rhetoric was a negotiating tactic.

See also: NAFTA round breaks up in discord, but new round set