The Canada, Mexico and the US are making efforts to make certain that the NAFTA renegotiation talks move along at an accelerated clip. This is because the three partners to the meetings are all attempting to finish the renegotiation of the accord prior to Mexico’s elections at the beginning of July. The Mexican news outlet, Notimex, has recently reported that talks may be finished as early as 15th of May.
In addition to proposing 75% regional content for originating product, the US has also suggested that forty percent of light vehicles and forty-five percent of pickup trucks be manufactured in geographic locales with salaries equal to US $16 and above. Mexico proposed that the regional content for automobiles assembled in North America be 70% and that it be phased in over a ten-year timeframe. US trade personnel, however, rejected this suggestion at the NAFTA renegotiation talks.
Luis Videgaray, the Mexican Secretary of Foreign Affairs, and Ildefonso Guajardo, the Secretary of Economics, have recently met with their Canadian and US counterparts in an effort to speed the pace of the NAFTA renegotiation talks. The biggest point of contention in the talks has been related to the chapter of the NAFTA that concerns itself with the rules of origin for the automotive industry. Last week Secretary Guajardo presented a counterproposal to those made by the United States negotiating team which would define automobiles assembled within the trading bloc as “NAFTA originating,” if they are composed of seventy-five percent of regional content. Both Canada and Mexico have asserted that they both believe that this percentage is too high.
Beyond automotive industry issues, NAFTA renegotiation talks have been a challenge due to other points of divergence. Among them are details concerning access to markets in the agricultural sector, the “sunset” clause for the NAFTA agreement and, also, Chapters 11, 19 and 20 of the treaty which deal the resolution of conflicts between the three trading partners.
In addition to the aforementioned points, other subjects of NAFTA renegotiation talks include:
- Technical Obstacles to Commerce
- Administration and Transparency
- Small and Medium-Sized Business
- Information Infrastructure
- Border Trade Infrastructure Improvement
- Regulatory Practices
- Digital Modernization
- Intellectual Property Protection
- Government Purchases
Although progress has been made on many fronts, some international trade watchers are of the opinion that if the most contentious issues of the NAFTA renegotiation talks are not agreed upon, the result will be a North American Free Trade Agreement that is neither dead or alive. Some are calling such a scenario a “Zombie” NAFTA.