U.S. unveils proposal to boost autos content in NAFTA

USA Trump und Trudeau im Weißen Haus | NAFTA

The push for higher content is one of the Trump administration's key demands at talks to modernize the North American Free Trade Agreement.

A new report claims the U.S.is proposing the lifespan of any new trade deal be limited to five years.

Although sources briefed on the talks describe the mood as sour, Mexican and Canadian politicians say there is no question of leaving the table for now. Trade among the three countries has more than quadrupled since 1994 to over $1.2 trillion annually.

It contains three ideas that automakers say would complicate production: requiring all cars sold without tariffs to include 85 per cent North American content, 50 per cent US content and an elaborate, detailed listing of parts that didn't exist in 1994 when NAFTA was introduced.

Though initial reaction was positive, the source said the USA could still make more demands.

A Canadian official noted that senior government figures in Ottawa had already rejected both ideas as unworkable.

Dziczek and auto industry groups say that the USA content proposal is likely to backfire, with automakers and suppliers simply choosing to pay the 2.5 percent US tariffs for passenger cars and many parts, sourcing more of them from China and other low wage countries in Asia.

Among those he met Thursday were groups active in advancing reproductive choice for Mexican women - in January, U.S. President Donald Trump reinstated and expanded the controversial "Mexico City Policy" that bans using foreign aid for abortion-related activities.

Trump aides 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.

"A strong North America can only come from a strong Mexico, a strong Canada, and a strong United States", he said.

A spokeswoman for U.S. Trade Representative Robert Lighthizer declined to comment.

"There is scope in the negotiation of the agreement for a consensus that benefits the three countries", he said.

His remarks and the tension around NAFTA helped push the peso down 1 percent against the US dollar to a five-month low.

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