Mexico eyes more Nafta content in future products

Amodernisation of the Nafta trade deal should protect existing industrial supply chains in North America, but could seek to source more work for future products from the member states to help create jobs, a top Mexican negotiator in the process said. The government of US President Donald Trump triggered the process to start renegotiating the North American Free Trade Agreement (Nafta) between the United States, Canada and Mexico, which could usher in formal talks by mid-August. Trump has threatened to jettison the 23-year-old accord if he cannot rework it in favour of the United States, arguing it has gutted US manufacturing by outsourcing jobs to Mexico.

Nafta’s supporters say the integration of lower-cost Mexico into production chains has safeguarded employment by enabling North America to compete better with Asian and European rivals.

Mexican business leaders say toughening rules that stipulate a certain amount of content must be sourced from North America to qualify for Nafta certification could be one way of allaying US fears, and pave the way for an agreement on the revamp.

Offering insight into how Mexico may seek to broker a deal, Moises Kalach, a linchpin of the country’s private sector defence of Nafta, said US business leaders and government officials were increasingly persuaded that existing supply chains should not be disrupted — but that future production lines could be tailored to provide more work for North America.

“Obviously, innovation and technology have been changing the way and even form of how products are made, and there’s an opportunity to have certain products and innovations made with a lot more regional integration, without doing damage to current lines of production,” Kalach, who heads the international negotiating team of Mexico’s Consejo Coordinador Empresarial business lobby, said by phone from Washington.

“This is part of the proposal that we want to put on the table, that we want to push,” Kalach added, speaking after US Trade Representative Robert Lighthizer had kicked off a 90-day consultation process with Congress and others over Nafta.

Elaborating, Kalach said new products and materials in industries like carmaking and electrodomestic goods — sectors where Mexico runs a sizeable trade surplus with the United States — could be made with higher Nafta content in the future.