Mexico preparing proposal for NAFTA automotive sector

MEXICO CITY - Mexico is preparing a proposal concerning the North American Free Trade Agreement (NAFTA) rules of origin for the automotive sector, ahead of the seventh round of negotiations set to begin next weekend, said Mexican Economy Minister Ildefonso Guajardo on Monday.

The Mexican proposal will be added to the two existing initiatives being discussed with the US and Canada, Guajardo told journalists without providing details.

"We are working with the Mexican Association of the Automotive Industry (AMIA) to determine a Mexican proposal for the next round," said the minister.

Negotiators from Canada, the US and Mexico will meet in Mexico City from Feb 25 to March 5 for the seventh round of NAFTA renegotiation talks.

Rules of origin for the automotive sector, determining the percentage of each vehicle which must be manufactured in North America, is considered one of the main sticking points for the talks.

The US wants the rules of origin to be increased to 85 percent within the NAFTA region, and at least 50 percent from the US

This proposal has been widely rejected by Canada and Mexico who have insisted the levels be maintained at 62.5 percent for vehicles and 60 percent for autoparts in the NAFTA region, levels which have been in place since 1994.

Guajardo did admit that the rule could be modernized, since it was created to govern types of cars that are not compatible with the current reality.

"After six months of negotiation, I think it is time to recognize a strengthened rule of origin, taking us away from the vehicle we used as a model, which was in 1992, and which is different in 2018," said the minister.

The three countries have been negotiating NAFTA since August after US President Donald Trump requested to renegotiate the deal. Trump believes the agreement has been detrimental to American jobs and the economy.