The US and Mexico have announced they have reached agreement in trade negotiations that are part of an effort to revamp the NAFTA trade agreement. However, Canada  – the third participant in NAFTA – is yet to agree to the new rules.

Local content on automotive products traded between the NAFTA nations had been a contentious sticking point in negotiations between the three countries.

The US and Mexico agreed to increase regional automotive content to 75% from the current 62.5% in NAFTA, with 40-45% of production by workers earning at least US$16 an hour, the US Trade Representative's office said. That measure is aimed at discouraging manufacturers from relocating to lower-wage Mexico. 

The two countries also agreed to review the deal after six years.

US President Donald Trump suggested the bilateral accord between the US and Mexico would stick if Canada doesn't sign up. He also said the Nafta name would be scrapped, to be replaced with the 'US-Mexico trade agreement'.

However, there was no commitment from the US to drop US tariffs on aluminium and steel from Mexico.