Mexico to Reply to US NAFTA Auto Proposal Next Week

Mexico will respond to the latest U.S. proposals to rework automotive sector rules under a revised North American Free Trade Agreement (NAFTA) when ministers meet next week, Mexican Economy Minister Ildefonso Guajardo said on Tuesday.

Guajardo is due to meet U.S. Trade Representative Robert Lighthizer and Canadian Foreign Minister Chrystia Freeland in Washington next Monday to push for a deal on NAFTA after more than eight months of talks to update the 24-year-old accord.

At the heart of the revamp is the United States’ desire to retool rules for the automotive sector in order to try to bring jobs and investment back north from lower-cost Mexico.

Mexico’s main auto sector lobby on Monday described the latest U.S. demands, which include raising the North American content to 75 percent from the current 62.5 percent over a period of four years for light vehicles, as “not acceptable.

Response will come next week

When asked whether he agreed with the automotive lobby, Guajardo said Mexico was still consulting with the industry over the matter and would respond to the proposal next week.

“We will bring a plan in response to the U.S. position,” he told reporters at a news conference in Mexico City.

The minister said it was too early to say whether the three countries could reach a deal in the coming days. If the negotiators were sufficiently “creative” and “flexible,” a successful outcome was probable, Guajardo added.

Tariffs are not part of discussion 

The minister was speaking a day after the Trump administration decided to extend by one month an exemption for Mexico and Canada to planned steel and aluminum tariffs.

Guajardo said Mexico would not accept the U.S. imposition of tariffs, and that his government could mirror U.S. policy to ensure Mexico did not become a “back door” to the United States for steel or aluminum imports from Asia in particular, he said.

He stressed, however, that the steel and aluminum dispute was completely separate from the NAFTA negotiations.

The minister noted that the three sides remained at odds over a number of issues, including U.S. demands to change dispute resolution mechanisms and to impose a sunset clause that could automatically kill NAFTA after five years.

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