US Plan to Rewrite NAFTA Car Rules Unworkable

The Mexican government views the US proposal for tightening content rules for car manufacturing under NAFTA as not viable and likely to cause serious damage to the North American auto industry, said a person familiar with the nation’s stance.

Mexico hasn’t prepared or presented a counter-proposal because it sees the problem as going beyond the specific levels sought by the US and thinks the entire concept is unworkable, said the person, who asked not to be identified discussing negotiations taking place behind closed doors, Bloomberg reported.

The Trump administration has proposed major changes to NAFTA’s auto rules, introducing a requirement that 50% of parts or vehicles be US-made, and increasing the minimum amount of regional content needed to 85% from 62.5%. The US auto industry has pushed back against the idea, and more than 70 house Republicans and Democrats also opposed it in a recent letter.

President Donald Trump has threatened to withdraw from NAFTA, which he blames for hundreds of thousands of lost jobs in US manufacturing, if he cannot renegotiate the deal. Mexico, Canada and the US started talks in August and plan to continue them until at least March. At the current round taking place in Mexico City, which lasts until Nov. 21, US negotiators have given no indication that they are willing to compromise on their proposal for a mechanism that would automatically end the North American Free Trade Agreement after five years, the person said.

Mexico and Canada have said they’re willing to review NAFTA every five years as long as the evaluation does not lead to automatic termination.