Daily Management Review

Mexico And U.S. Close To Locking NAFTA Deal


08/27/2018




Mexican Economy Minister Ildefonso Guajardo said that bilateral differences with the United States on the North American Free Trade Agreement (NAFTA) are set to be eliminated as talks continue between the trade representative of the two countries.
 
There was anticipation about the likelihood of the deal as Guajardo had earlier told reporters that the US and Mexico were likely “hours” away from getting to the deal. However the minister later said that more needs to be done.
 
“We’ve continued making progress,” Guajardo said.
 
Developing new rules for the automotive industry was focus of the Mexico-U.S. discussions. The auto sector has been identified by US President Donald Trump to be at the center piece for renegotiating the 24-year-old trade deal because Trump believes that the trade agreement had been a “disaster” for American workers.
 
Canada is not participating in the latest round of talks - which has bene going on for a year now and Guajardo said that Mexico, US and Canada would need to deliberate for another week at least to work out a solution.
 
Canada would return once bilateral issues were resolved, said Mexican Foreign Minister Luis Videgaray. “But we haven’ve finished this stage yet,” he said.
 
According to sources, the two sides – Mexico and the US, are slowly nearing an agreement and there is now “little” separating the two.
 
Sources in the industry say that the major players are not ready to come to an agreement of enhancing the regional automotive content threshold for tariff-free access under NAFTA to about 75 percent from the current 62.5 percent.
 
Despite this, an attempt to impose a ceiling on the number of car and SUV exported to the United States from Mexico duty free or at a tariff of 2.5 per cent is being sought by the Trump administration. This has complicated the auto talks.
 
According to two automakers, the US administration want that cars and SUVs exported from Mexico be capped at about 2 million units which is more than the 1.77 million that was exported from Mexico into the US in 2017 which excluded pickup trucks.
 
When pick up trucks are included, the number of exports from Mexico reaches a total of over 2.3 million vehicles in to the United States last year.
 
There was no comment from Mexico’s economy ministry.
 
During the week end, Trump said in Washington that the two countries could arrive at an agreement “soon” as there were clear indications from Mexico’s chief trade negotiator for the incoming president that energy issues would be resolved as well as a touchy U.S. “sunset clause” demand.
 
(Source:www.reuters.com)






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