Preliminary Nafta Deal Reached Between U.S. and Mexico
To qualify for zero tariffs under Nafta, car companies would be required to manufacture at least 75 percent of an automobile’s value in North America under the new rules, up from 62.5 percent previously. They will also be required to use more local steel, aluminum and auto parts, and have a certain proportion of the car made by workers earning at least $16 an hour, a boon to both the United States and Canada.
Talks in recent days had stumbled over how these rules would overlap with additional auto tariffs that the president has threatened, as well as new measures that would open Mexico’s oil and gas sector to foreign companies, provisions that are controversial within the new elected Mexican administration that is poised to take office in December.
Speaking Sunday, Ildefonso Guajardo, the Mexican economy secretary, said that Jesus Seade, the designated chief negotiator of Mexican President-elect Andres Manuel Lopez Obrador, had worked out an agreement on energy with his American counterparts in recent days.
Both the Mexicans and Americans have been eager to reach a fully revised Nafta deal by the end of August, a date that would give the Trump administration enough time to notify Congress that a deal had been finalized and still have that deal be signed by the outgoing Mexican administration of Enrique Peña Nieto. That goal now looks doubtful, given Canada’s recent absence from the negotiating table.
Still, progress in the negotiations with Mexico will come as a relief to American businesses that depend on trade agreements and have been shaken by Mr. Trump’s confrontational approach to America’s biggest trading partners.
Mr. Trump’s decision to impose tariffs on foreign steel and aluminum has put American manufacturers, farmers, retailers and other industries in the middle of the trade war as other countries fire back with retaliatory taxes of their own. That has driven up costs for American businesses and reduced access to foreign markets.
Mr. Trump has continued to inject uncertainty into the Nafta talks, believing that the strategy gives his advisers an upper hand at the negotiating table. He has hit Canada and Mexico with hefty tariffs on their shipments of steel and aluminum and threatened further taxes on their cars.