U.S. lowers NAFTA key auto content demand: Mexico auto lobby

MEXICO CITY (Reuters) – U.S. trade negotiators have reduced their demand for regional auto content under a reworked NAFTA trade deal to 75 percent from the 85 percent they had sought, the head of Mexico’s automotive industry association (AMIA), said on Friday.

“The U.S. put on the table 75 percent instead of 85 percent for the regional content value of the vehicle and its core components,” AMIA president Eduardo Solis said in a statement.

“All of this is being carefully analyzed and specific questions are being asked during this round of the U.S. negotiators (in charge of) rules of origin.”

AMIA has argued it would be difficult to meet an increase in the regional content requirement, the threshold that cars must meet so they can qualify to be sold in North America tariff-free, to 85 percent from its current 62.5 percent.

U.S. negotiators discussing changes to the North American Free Trade Agreement also recently floated the idea that 40 percent of automotive production must occur in areas paying wages of between $16 to $19 per hour.

Setting wage minimum wage thresholds for the auto industry could benefit the United States and Canada, whose trade unions say that lower Mexican pay has prompted manufacturing capacity to move south of the Rio Grande.

Negotiators from the three nations were set to discuss those new proposals this week at ongoing talks in Washington. Talks on rules of origin were due to take place on both Friday and Saturday, according to a schedule seen by Reuters.

Talks to rework NAFTA, which underpins $1.2 trillion in annual trade, began last year after President Donald Trump took office promising to abandon the 1994 agreement if it could not be reworked to better serve American interests.

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