What are the rules of origin that halt NAFTA negotiations?

Analysts still trust that an agreement will be reached. Photo: AFP

In the framework of the rounds of renegotiation of the vital North American Free Trade Agreement (FTA) between the United States, Mexico, and Canada, the three countries still have thorny issues in front.

One of them is the rules of origin of the automotive industry, that is, the percentage of national materials that a car must have built in the region to avoid paying tariffs.

Just this week, during the development of the seventh round of negotiations, the  United States called its negotiator on the rules of origin of the automotive sector for consultations in Washington, delaying talks on the controversial issue. ”

The EU proposal

The United States seeks to raise the rules of origin from the current 62.5% to 85%, in addition to having 50% of US content, a proposal that faces resistance from Mexico, Canada, and the shipowners.

The Canadian proposal

In the most recent round, Canada presented a proposal to meet Washington’s demand that involved modifying the way in which intellectual property and emerging technologies are accounted for, although it was not well received by Lighthizer.

Canadians propose to consider the total value of the vehicle in the calculation, including elements such as software.

The Mexico Proposal

Mexico has manifested itself by maintaining 62.5% of national materials.

This week, Guajardo said that Mexico was working on a proposal for the modernization of the rules of origin, although the leader of the Association of Shipowners in Mexico (AMIA), Eduardo Solis, said that the US initiative is not acceptable and that they are reviewing the initiative of Canada.

“There is no position of the Mexican automotive industry in this next round, there is no proposal different from what we have expressed, which is that the rule of origin expressed in the original FTA is the one that is maintained.”Eduardo Solis
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