Manufacture This

The blog of the Alliance for American Manufacturing

American official expresses doubts as United States and Mexico spar over auto details.

Time for an update on NAFTA!

Last time we left the renegotiation of the North American Free Trade Agreement, a ministerial meeting in Washington DC had wrapped up and attendees reported progress, despite the usual Donald Trump chatter in the background.

The ministers have reconvened for more meetings, and progress is again being reported. The big news so far is more incremental movement on the auto front between the United States and Mexico.

The latest U.S. proposal includes raising North American auto content to 75 percent from the current 62.5 percent over four years for light vehicles, but the Mexican auto industry has rejected that as “not acceptable.”

Mexico instead has pitched a plan to raise the auto content threshold to 70 percent, according to four people familiar with the matter. It foresaw a gradual 10-year phase-in for pickups and light vehicles, one of the sources said. It also contained a flexible salary-related component, according to a fifth person.

Content isn’t the only sticking point on auto production. The other big one is labor costs. American negotiators want more vehicles made by higher-paid workers, while the Mexican auto industry argues that would price them out of the market.  

Is that enough movement to get past the deal past a bunch of looming political deadlines? It doesn’t look like. An unnamed U.S. official told the Washington Post on Wednesday that “the odds of quickly reaching a deal that fulfills President Trump’s campaign promise to return lost manufacturing jobs to the United States are growing longer.”

Dang. Well, President Trump is undoubtedly cutting new deals and opening new markets for American manufacturers.

The Post lays out the deadlines:

The president’s authority to negotiate trade deals that Congress must approve or reject without amendment expires July 1, coincidentally the date of Mexico’s presidential election. U.S. officials say that May 18 represents the deadline for securing congressional approval under his existing authority this year, given the various timelines specified in the legislation.

We'll be keeping an eye on the talks as they continue.