Top trade officials from Mexico are in the US this week after optimism showed through last week with a potential agreement on automotive rules as part of NAFTA, according to Politico, which notes progress on the contentious issue bodes well for farmers wishing for the certainty a NAFTA 2.0 would promise.
In order to qualify for tariff-free status in the North American market, the United States is pushing for 40% of the content of cars and 45% of the content of pickup trucks to be made by workers who are paid at least USA $16 per hour. US proposals have sought to increase Mexican salaries and provide incentives for auto manufacturers to either move production back to America or at least stop investing so much south of the border.
Mexican and Canadian officials said today that Mexico and the United States are getting closer to reaching a deal on rules of origin for the auto sector.
There are signs Mexico has shown some flexibility since it offered in May to raise the content requirement to 70 percent from a current 62.5 percent.
While the three nations have remained far apart on several major points for nearly a year after the negotiations began, Trump said earlier this month that he's heading toward a "dramatic" deal with Mexico and that he may prioritize bilateral trade talks with the southern neighbor over Canada.
A pragmatic approach might involve Canada unilaterally implementing initiatives that enhance the likelihood of a successful bilateral trade agreement if the trilateral NAFTA negotiations fail, while also making economic sense in their own right.
"I would say that we realized there might be conditions for getting a NAFTA deal", he said in Geneva, where he met other trade allies to discuss possible responses to U.S. President Donald Trump's threats to unilaterally impose tariffs on vehicle imports.More news: There is no Willian problem, says Chelsea boss Sarri
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Guajardo, who has said in recent days he thought the outline of a deal could be agreed in August, is due in Washington to talk with U.S. Trade Representative Robert Lighthizer on Thursday.
Nevertheless, they are hopeful that progress will be made at ministerial talks scheduled for later this week.
"Any one country being able to hold the agreement hostage every five years does not provide the certainty" businesses need to invest, Mr. Bird said.
Some analysts predict that if a new deal is made the peso could strengthen to below 18 per dollar from its current mark of around 18.6 to the greenback.
NAFTA talks began in August a year ago.
In continuing to insist upon a trilateral agreement, Canada risks seeing the Trump administration walk away from the negotiations prior to the midterm congressional elections in October, to solidify the support of American voters sympathetic to the president's mercantilist view of trade relations and his anti-immigration stance.