Source on NAFTA: U.S. Wants Cars to Have at Least 50% American-Made Parts

By Sahid Fawaz

The U.S. could be taking a strong approach at the NAFTA talks to protect its auto industries.

Reuters reports:

“The United States on Friday unveiled hotly contested proposals for higher regional autos content in the North American Free Trade Agreement, three sources said, casting further doubt on the chances of reaching a deal to modernize the pact.

Washington made its move a day after insisting that NAFTA contain a sunset clause that could mean the deal expires in five years.

Canada and Mexico, the two other members of the pact, strongly oppose both ideas. A Mexican source with direct knowledge of the talks called the auto content proposal “absurd.”

Sources familiar with the talks say the mood is bad and question whether the negotiations can be wrapped up by the end of the year as planned.

President Donald Trump, who complains that NAFTA has been a disaster for the United States, is threatening to walk away from the deal unless major changes are made.

The U.S. side made its auto proposal during the fourth of seven planned rounds of talks on the treaty. Ensuring that autos need more regional content to qualify for NAFTA tariff-free access is one of the Trump administration’s key demands.

Canada and Mexico say such a move would disrupt the highly integrated continental auto industry.

One of the sources said the United States wants to increase the North American content requirement for trucks, autos and large engines to 85 percent from 62.5 percent. Furthermore, Washington insists 50 percent of content must be U.S.-made.

Trump administration officials say current content rules are too lax and have allowed auto companies to bring in too many cheap parts from China and other low-wage Asian countries. They are also seeking to halt the migration of vehicle production and manufacturing jobs to Mexico from the United States.”

For the rest of the story, check out the piece at Reuters here.

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