U.S. NAFTA demands “not viable” according to Mexican Economy Minister

December 2, 2017

The Trump administration’s proposal to require 50 percent of the value of vehicles to be produced in the U.S. remains a hotly contested sticking point in ongoing NAFTA negotiations. Mexico’s Economy Minister, Idelfonso Guajardo, underscored that point in front of reporters on Wednesday, after emerging from several meetings with high-ranking trade officials in Washington.

At issue is the so-called Rules of Origin clause within NAFTA, which specifies how much value-added content — that is, the increase in value of the goods after each step in the manufacturing process — must be from the three NAFTA member nations, and also how much must be U.S.-specific, in order to avoid hefty import taxation.

Guajardo said he was “clear that the domestic content is something that is not viable at this point.”

Multiple manufacturers have previously stated similar stances, after the U.S. proposed increasing the NAFTA-produced content requirement from the current 62.5 percent to 85 percent. Neither Mexico, nor Canada, both of which house key manufacturing facilities for various manufacturers, have tendered a counter-proposal.

With the automotive content debate remains at an impasse ahead of another, albeit smaller, round of talks later this month, Guajardo said he wants to move the talks away from the issue, so the three sides can search for common ground elsewhere, like food safety and telecommunications.

“We have to start a process of looking at what’s next after we complete the modernization effort,” he said.

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