The NAFTA Renegotiations and the Automotive Rules of Origin: Upcoming Round in Mexico City Ready for February 25th Start

The NAFTA renegotiations entered a critical stage in January, with all eyes now turned to the next round scheduled for February 25, 2018 in Mexico City. While initial rounds were not encouraging, more recent reports indicate that progress has been made on a number of fronts, including the automotive rules of origin.

Notably, the rules on North American content of vehicles and vehicle parts will be among the first items addressed in Mexico City. According to the negotiating schedule, over 20 hours of discussions are planned on automotive rules of origin, a departure from previous reports that only non-controversial chapters would be on the table.

We also understand that Mexico will be offering an automotive rules proposal during the upcoming seventh round. It is even possible that North American content numbers could be addressed for the first time in response to the US proposal made in October.

Negotiators are aiming to complete their work as quickly as possible, given the US and Mexican electoral calendars. Media reports, which have been suggesting a “stalled NAFTA,” are now sounding more encouraging, with more debate centered on “when,” not “if.” While many pundits feel that negotiations will continue throughout the year, some observers caution that the talks could wrap up before the Mexican elections to be held this July.
Although a NAFTA withdrawal by the US must be a factor to consider with the current Administration, the noise about an imminent withdrawal seems to be dying down. With the tax bill now law, Congress appears to be focusing more on the NAFTA, with many Members warning the White House about the damaging effect terminating NAFTA would have on the US economy.
Predicting trade negotiations outcomes is always challenging, and these NAFTA negotiations are no different. Yet, a path forward for NAFTA 2.0 now seems more realistic. What seemed doubtful in 2017 now seems possible in 2018 – that the NAFTA automotive origin rules could be headed for a significant overhaul.


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