Canada frozen out of NAFTA amid US-Mexico talks

Canada frozen out of NAFTA amid US-Mexico talks

The U.S. and Mexico are working to blend their respective proposals on auto rules of origins in the North American Free Trade Agreement talks happening in Washington, DC, this week after the U.S. earlier this year rejected Mexico's approach, according to sources close to the talks.

In order to qualify for tariff-free status in the North American market, the United States is pushing for 40% of the content of cars and 45% of the content of pickup trucks to be made by workers who are paid at least USA $16 per hour.

The official also noted that the USA and Mexico have issues to figure out between themselves, such as their differences on labour changes in the auto sector, textiles and seasonal fruits.

Mexican negotiators are optimistic about the possibility of getting a NAFTA deal and are hopeful of progress in coming days, the country's deputy economy minister said ahead of a second ministerial meeting in Washington later this week.

While the three nations have remained far apart on several major points for nearly a year after the negotiations began, Trump said earlier this month that he's heading toward a "dramatic" deal with Mexico and that he may prioritize bilateral trade talks with the southern neighbor over Canada.

A spokeswoman for Lighthizer also stressed Tuesday that there's nothing odd about one-on-one NAFTA talks. The current rate is 62.5%.

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With regard to steel, aluminum and glass content, Guajardo ruled out that a 70% North American content rule could be applied - as proposed by U.S. Trade Representative Robert Lighthizer - but suggested that bonuses could be offered to manufacturers who met those levels.

Trump has threatened to impose sweeping new tariffs on imported vehicles in a possible attempt to pressure Mexico and Canada into striking a deal that would help drive manufacturing jobs back to the U.S. The Mexican official said they are together working with Canada to rebuff U.S. efforts to link a resolution of possible auto tariffs with a full NAFTA agreement.

Mr. Malpica also said the United States was still pushing for a sunset clause that would require the treaty to be reopened every five years.

Some analysts predict that if a new deal is made the peso could strengthen to below 18 per dollar from its current mark of around 18.6 to the greenback.

Davis said Lighthizer "has great respect for Minister Freeland and considers her a good friend", pointing out that the NAFTA negotiations have had both bilateral and trilateral meetings over the past year.

President Trump has announced his desire previously to wrap up talks with Mexico before reaching an agreement with Canada, even though Canada and Mexico have also vowed to stick to three-way negotiations.

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