The United States and Mexico have made substantial progress on the issue of autos content rules at talks to renew the North American Free Trade Agreement (NAFTA), Reuters reports, citing Mexican and Canadian officials.
Guillermo Malpica, head of the trade and NAFTA office for the Mexican government, was quoted as saying that Washington had “started showing more flexibility last week” on autos content and other topics at the negotiations, which have dragged on for almost a year.
“We are getting close” to an agreement on the so-called autos rules of origin, which dictate how much of a vehicle must be made in the three NAFTA nations to qualify for duty-free status, Malpica said.
Canadian trade negotiator Colin Bird told an auto industry conference in Michigan on Wednesday that NAFTA negotiators are making progress on auto content rules, and endorsed the concept of linking those rules to improving workers’ wages, the report said.
“Harnessing the power of trade agreements to promote higher wages is the kind of policy all three countries can get behind,” Bird said.
Speaking to local media on Tuesday, Mexican Economy Minister Ildefonso Guajardo also suggested that negotiators have made progress on auto salaries.
US and Canadian trade unions have complained that more manufacturing has gravitated to Mexico due to the country’s low wages.
Mexico balked at the prospect of foreign intervention in salaries, but the debate has shifted, Guajardo said.
Bird and Malpica said they are optimistic about the possibility of reaching a deal to renew the NAFTA and are hopeful of progress when ministers from Mexico and the US meet this week.
But the officials cautioned that the issues remaining in the talks are challenging.
In May, Mexico offered to raise the autos content requirement to 70 percent from a current 62.5 percent. The US is asking for the threshold to be 75 percent.
Malpica also said that Washington is still pushing for a sunset clause that would require the treaty to be reopened every five years. Canada and Mexico strongly oppose the idea.
“Any one country being able to hold the agreement hostage every five years does not provide the certainty” businesses need to invest, Bird said.
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