Don't Touch Vehicle Content Rules, Say Automakers Ahead of NAFTA Negotiations

Steph Willems
by Steph Willems
dont touch vehicle content rules say automakers ahead of nafta negotiations

As the clock counts down to the beginning of talks aimed at revamping the North American Free Trade Agreement, automakers in Mexico, the U.S. and Canada know one thing they don’t want to see changed — rules of origin.

Auto manufacturers must abide by minimum regional (NAFTA-wide) content rules in order for vehicles to remain free from import tariffs. President Trump’s proposed reforms aim to benefit U.S. companies, but could lead to greater costs heaped onto automakers — something no profit-minded company desires.

Naturally, automakers wants their feelings known well before the three countries get down to brass tacks.

According to Reuters, the Mexican Automotive Industry Association (AMIA) has announced automakers in all NAFTA counties agree the existing rules of origin should remain in place. Under NAFTA, a North American-produced light vehicle must contain a 62.5 percent level of regional content to confirm to the rules.

“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,” Eduardo Solis, AMIA’s president, told Reuters. “In terms of access to markets and rules of origin, what we have is a shared position.”

Solis said the rules have helped make the auto industry more integrated, offering greater value to car companies. Mexico has benefited greatly from the pact, with automakers investing billions into its low-cost manufacturing base. Each member of the Detroit Three has assembly plants in the country.

In the past, Trump has threatened to levy a 20-percent tariff on Mexican-built cars. That created a rift between the two countries, with a Mexican trade official flatly refusing to attend NAFTA talks if the proposal remains on the table.

“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,” Solis said.

Last Thursday, the Trump administration kicked off a 90-day countdown to renegotiation talks, during which it will consult with Congress, industry, and the public. Some U.S. and Canadian labor leaders have voiced support for elements the plan. Former UAW president Bob King and his successor, Dennis Williams, have both expressed a desire to see NAFTA reformed in the interests of protecting U.S. autoworkers.

[Image: General Motors]

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  • Jeff S Jeff S on May 24, 2017

    So Lou_BC you think that Trump will either be impeached or leave office voluntarily? Everything has been so crazy with the firing of Comey and the Special Prosecutor appointed to look into the Russia Gate all in the first 4 months of office. Crazy man crazy.

    • Lou_BC Lou_BC on May 25, 2017

      @Jeff S - I'm not sure if he'll be impeached or resign. The fellow who ghost wrote "Art of the Deal" feels that he will resign and try to make it look like it was his idea and turn it into a "win" for him. If his approval ratings drop further, especially among Republicans, they will turn on him to try to keep themselves in power. If they don't, the GOP will get slaughtered mid term. Once Democrats have a majority, it will be a matter of time before they demand his head on a platter. It is telling when world leaders think that he is an idiot. NATO is telling leaders to keep any comments to 2-4 minutes because he can't focus for much longer than that. Massage his ego and get what you want.

  • Jeff S Jeff S on May 25, 2017

    @Lou_BC--Agree I think Trump will resign at some point. I don't think 2018 is looking good for the Republicans and many are distancing themselves from Trump. Trump had no idea what the Presidency entailed and I even think he was surprised he won. Hillary was much more qualified to be President but she ran a bad campaign and Hillary is very unlikable and lacks any kind of charisma (unlike Bill). Also the Clinton Foundation dealings did not help her campaign along with calling a group of voters deplorable. Trump really has to do something with NAFTA to deliver on one of his campaign promises and because of the mid-term elections which as you stated are not looking very good for Republicans. I believe a compromise will be worked out which will let the automakers keep their plants in Mexico and Canada with a much lower tariff than promised that will not hurt trade. Doesn't help US workers if trade between Canada and Mexico is significantly reduced.

    • Lou_BC Lou_BC on May 25, 2017

      The new proposed budget may prove to be the stake through the heart.

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  • Wayne no one ever accused Mary Teresa Barra of being smart
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