Before actual negotiations kick-in, the key players are venting their expectations so as to position themselves better once the bargaining starts.
According to the president of the Mexican auto manufacturer’s association, automakers from across the United States, Mexico and Canada agree that there should be no changes in the rules of origin in upcoming revamp of the North American Free Trade Agreement (NAFTA).
According to the rules of origin as stated in NAFTA, producers from the United States, Mexico and Canada must meet minimum regional, or NAFTA-wide, content requirements to be tariff-free.
“Our position is that the trade agreement has been a success, and we shouldn’t be touching something as important as the rules of origin,” said Eduardo Solis, president of AMIA, a Mexican automakers’ industry group.
He went on to add, NAFTA’s rules of origin have been instrumental in creating value and integrating the auto industry in North America.
“In terms of access to markets and rules of origin, what we have is a shared position,” said Solis.
Mexico has attracted big global automakers, including Fiat Chrysler, Volkswagen, General Motors Co and Ford Motor Co.
On Thursday, the Trump Administration had triggered a ninety day consultation period with Congress, industries and the American public after which NAFTA talks would be held.
Revamping NAFTA, one of the world’s biggest trading blocs, is scheduled to begin on August 16.
Businesses in Mexico have been bracing for the looming NAFTA talks, which Trump has insisted must happen since it doesn’t benefit American companies and workers.
“We need to remain cautious and at the same time prepare the data that shows why NAFTA has been a success for the three nations,” said Solis who warned that Mexico should not become overconfident before the commencements of actual negotiations.
Mexico’s economy, in which its booming auto sector contributes handsomely, has been a clear beneficiary of NAFTA.
The trade bloc has made it Latin America’s second biggest economy as well as a key export hub; thanks to cheap labour, Mexico is at an advantage since NAFTA provides it with free trade accords with dozens of nations.