NAFTA negotiators discussed rules of origin on Monday as the Trump administration’s expected demand for U.S.-specific automotive content requirements was emerging as a major obstacle to a deal, auto industry lobbyists said.
U.S. Trade Representative Robert Lighthizer and Canadian Foreign Minister Chrystia Freeland arrived in Mexico City to close out the second round of talks to modernize the North American Free trade agreement on Tuesday along with Mexican Economy Minister Ildefonso Guajardo.
U.S. President Donald Trump has repeatedly threatened to abandon the 23-year-old pact unless it can be rewritten to reduce U.S. goods trade deficits of about $64 billion with Mexico and $11 billion with Canada.
“Addressing the U.S. trade deficit is a top priority in renegotiating #NAFTA,” the U.S. Trade Representative’s office said in a tweet on Monday, breaking its silence since the talks began last Friday.
Auto industry lobbyists and government officials said they did not expect the USTR negotiators to reveal specific targets on Lighthizer’s demand that a minimum percentage of North American vehicles be produced in the United States.
One lobbyist, speaking on condition of anonymity because the proposal is still under discussion, said he believed that U.S.-sourced proposal would have to be at least 35 percent to satisfy Trump, who railed against automakers for moving jobs to Mexico throughout his election campaign last year.
“Anything less would not be a political victory” for Trump, the lobbyist said.