US to boost automotive sector
Trump is demanding tougher rules of origin for vehicles in Nafta talks
IN THE OPENING OF THE Nafta (North American Free Trade Agreement) session of talks, the US did not give precise details of how much it wanted to boost North American automotive content, a source directly familiar with the negotiations said on Saturday.
Robert Lighthizer, US President Donald Trump’s top trade adviser, said that Washington wanted tougher rules of origin for vehicles, which determine how much of a vehicle must be built in the three Nafta nations – Canada, the US and Mexico.
He also said that the US was seeking new measures to ensure “substantial US content” for automotives.
Companies wishing to take advantage of free trade in goods guaranteed by Nafta must currently meet the 62.5 percent North American content requirement for vehicles and 60 percent for components.
But during the opening four-hour round of talks on the rules of origin on Friday, the US delegation did not give details of how much it wanted the requirements to be lifted by.
It also did not give a specific figure for what substantial US content for vehicles could mean, said the source, who asked not to be identified because of the sensitivity of the matter.
But US officials said they could not confirm the source’s account.
Agreement on a revised Nafta agreement could pivot on the automotive sector given its weight in trade.
The US had vehicles and vehicle parts trade deficits of $74 billion (R9772.82bn) with Mexico and $5.6bn with Canada last year, both major components of overall US goods trade deficits with its North American neighbours.
The US, Canada and Mexico on Wednesday opened talks in Washington to modernise Nafta, which was signed in 1994. Trump has denounced Nafta as a “disaster” that encouraged firms to shift production to Mexico.
Administration officials say strengthening the rules of origin for vehicles will help boost well-paid jobs in the US as well as cut the trade deficit with Mexico, another key Trump goal.
Automotive industry groups from Canada, Mexico and the US are pushing back against the demand for higher US vehicle content, saying that it would be too complex. According to a schedule, negotiators were due to continue discussing rules of origin on Saturday, as well as yesterday morning.
Mexican Economy Minister Ildefonso Guajardo and Canadian Foreign Minister Chrystia Freeland have both said that they were not in favour of specific national rules of origin within Nafta.