Ahead of NAFTA talks due to start on Tuesday (21 August), it has emerged foreign-brand vehicle makers with US plants have told US lawmakers they do not support Trump administration rules to raise the amount of local content in North American made vehicles.
A Reuters report noted talks between Mexican economy minister Ildefonso Guajardo and US trade representative Robert Lighthizer were due to resume in Washington to try to resolve remaining bilateral issues so that Canada, which had been sidelined for weeks from the negotiations, could return to the table.
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The news agency said automakers' position was in a previously unreported 16 August letter from their Here for America group to top trade-focused members of congress.
The letter could raise resistance to a revamped North American Free Trade Agreement from lawmakers in southern states where foreign manufacturers have built car plants, Reuters said.
"We remain concerned that, without further clarifications, assurances and modifications, many of those companies producing vehicles in multiple states will not be in a position to support legislation implementing a NAFTA 2.0," the group reportedly said in the letter, signed by John Bozzella, president of the Association of Global Automakers.
Reuters noted automotive experts have said some foreign brand automakers with smaller North American manufacturing footprints and fewer US research and development staff may have difficulty meeting the more stringent content requirements for years.
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By GlobalDataThe group said its members, which include Toyota, Volkswagen, Hyundai, Daimler, BMW, Nissan, Kia, Subaru and Volvo, account for nearly half of US vehicle production.
At the same time, the American Automotive Policy Council, which represents Detroit's Big Three automakers is "encouraged by the direction of the discussions", the trade group's head Matt Blunt told Reuters.
"We share the administration's overall goals of strengthening US auto manufacturing and creating jobs and given the importance of NAFTA to US industry we urge the negotiators to quickly complete the negotiations," added Blunt.
The report said the US and Mexico are closing in on a bilateral deal which would lift the requirement for North American content in regionally made vehicles to at least 70% from the current 62.5%.
The deal is expected to require that some 40% of the value come from high wage locations paying at least $16 an hour, meaning the US and Canada, a Mexican source close to the talks told Reuters.
President Donald Trump, who launched the renegotiation of the 1994 pact a year ago, has said he wants the reworked deal to bring manufacturing jobs back to the US, particularly in autos and auto parts, the news agency noted.
Other key unresolved issues include the phase-in time for the new automotive rules to take effect and whether the US demand for a 'sunset' clause that forces a renegotiation every five years is adopted, making long-term investment decisions more difficult, the report said.
Reuters added the letter from the Here for America group also raised concerns that national security tariffs on autos, auto parts, steel and aluminium would undermine the benefit of a NAFTA agreement.
