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Report: US seeks NAFTA rule requiring auto production in high-wage countries

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Six trends shaping the industries and sectors we cover in 2021

Six trends shaping the industries and sectors we cover in 2021

Capital Markets View – January 2021


Report: US seeks NAFTA rule requiring auto production in high-wage countries

The U.S. is proposing that a reworked North American Free Trade Agreement includes rules requiring a certain amount of automotive production to be carried out in countries that pay high salaries, Reuters reported, citing two sources familiar with the matter.

Such a rule would benefit the U.S. and Canada, whose trade unions claim that lower wages drive automakers to locate production in Mexico, according to the report.

The proposal comes after industry sources confirmed last week that the U.S. withdrew its demand that all vehicles built in Canada and Mexico for export contain at least 50% U.S. content — one of the major sticking points in the NAFTA talks. That move raised hopes of progress in otherwise sluggish negotiations.

The Mexican economy ministry declined to comment. A press official for Canadian Foreign Minister Chrystia Freeland referred questions to the U.S. Trade Representative's office. The trade representative could not be reached, Reuters said.

Mexico previously said that the next round of NAFTA negotiations had been tentatively scheduled to begin April 8 in Washington, but no date has officially been set.