NAFTA nations lock horns on U.S. auto demands as fifth
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[November 21, 2017]
MEXICO CITY (Reuters) -
Negotiators from the United States, Mexico and Canada square off on
Tuesday for the last time in a fifth round of talks to rework the North
American Free Trade Agreement, with stalemate brewing on a contentious
proposal to ramp up regional content for autos.
Officials and lobbyists say Mexico and Canada will firmly push back
against the U.S. demand to raise the minimum threshold for NAFTA autos
to 85 percent from 62.5 percent, as well as insist that fully half the
content is from the United States.
The proposal is a central plank of U.S. President Donald Trump's America
First strategy to bring back manufacturing jobs to the United States,
though it faces stiff resistance from the auto industry, which questions
Mexican and Canadian officials say they want the United States to
explain how the auto plan could prosper in view of the skepticism, and
have repeatedly indicated they have no intention of responding to the
scheme with a counterproposal.
Tuesday will be the seventh day negotiators have met during this Mexico
round, and officials hope to make announcements that can inject some
momentum into a process that more pessimistic observers fear is running
out of steam.
The current round has been less confrontational than the negative tone
of the October talks in Washington, where the United States set out a
series of tough demands, including the auto plan, said Caroline Freund,
a senior fellow and trade expert with the Peterson Institute for
International Economics in Washington.
"With U.S. tax reform front and center, the U.S. government really
didn't want to make this a big round, and (wanted) to let the
technocrats get on and do the negotiating on the less controversial
bits," Freund said.
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Moises Kalach, head of the international negotiating arm of Mexico's
CCE business lobby, which is coordinating the private sector's role
in the NAFTA renegotiation, talks to reporters during a break in the
fifth round of NAFTA talks involving the United States, Mexico and
Canada, in Mexico City, Mexico, November 20, 2017. REUTERS/Ginnette
Expectations for any major advances in the fifth round were scaled back when the
three sides announced that the ministers in charge of the NAFTA trade portfolio
would not attend the talks. Progress has been halting with the clock ticking.
The three countries have agreed to continue negotiating through the end of
March, when the campaign for the 2018 Mexican presidential election will get
Negotiators are eager not to allow the NAFTA revamp to become politicized by the
Mexican election campaign.
Mexican officials initially expressed hope that some chapters could finally be
closed during the fifth round, pointing to topics such as telecoms and
e-commerce. However, no concrete evidence of that has been forthcoming so far.
The 1994 accord underpins much of the more than $1 trillion in annual trilateral
trade, and Trump's repeated threats to dump NAFTA if he cannot rework it in the
United States' favor have spooked investors in Mexico in particular.
(Reporting by Dave Graham and David Lawder; Editing by Simon Cameron-Moore)
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