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U.S., Mexico reach preliminary deal on NAFTA

August 27, 2018   Don Horne

In a major advance in NAFTA negotiations, the U.S. and Mexico have come to a preliminary deal on new North American rules for automotive manufacturing and on other key issues, according to the Toronto Star and U.S. news outlets.

A deal would not be a separate trade agreement of the kind Trump has mused about replacing the three-country North American Free Trade Agreement with. Rather, it would be a sub-deal that will now be folded into the ongoing three-country talks over the future of NAFTA.

The deal was expected to include an increase in the minimum percentage of a car or light truck’s content that would have to be made in North America to qualify for tariff-free sales in NAFTA countries; the minimum is 62.5 per cent in the existing NAFTA. The U.S. had also proposed an increase in the minimum percentage of an auto part’s content that would have to be made in North America to qualify for tariff-free sales; the current minimum is 60 per cent.

In addition, the U.S. had proposed a new requirement that a certain percentage of a car’s content, perhaps 40 per cent, would have to be made by workers making a certain hourly wage, perhaps $16 (U.S.) per hour, that is much higher than the wage earned by Mexican autoworkers. And the U.S. had proposed a new requirement for how much of the steel in a car or light truck would have to come from North America.


(Toronto Star / New York Times)

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