9 May 2018

Mexico Offers Nafta Compromise on Car Content, Wages

News

Mexico is opening the door to compromise on the key Nafta issue of auto manufacturing, though it’s unclear if the flexibility is enough to reach a deal with the U.S. and Canada, according to four people familiar with the talks.

In talks in Washington on Monday and Tuesday, Mexico for the first time indicated a specific level to which it’s willing to raise North American automotive content -- 70 percent, according to the people, who asked not to be identified discussing private negotiations.

While that’s up from the current 62.5 percent, it’s unclear if it’s enough to strike a deal because the U.S. has been calling for 75 percent for the biggest components of cars. Mexico is also seeking to implement the changes more slowly than the U.S. wants -- over a period of a decade, according to two of the people.

The issue of auto wages remains contentious. While Mexican negotiators rejected a U.S. demand that almost half of every car be built by higher-paid workers, two people late Tuesday said the Mexican government left room for using some level of higher-wage production as a way to meet new Nafta content criteria. Setting wages through Nafta is controversial in Mexico’s auto industry, and two other people on Tuesday said the Mexican proposal included no wage targets, underscoring the competing interests in the complicated talks.

 

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