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Home>Trump administration seeks to shake up Nafta talks with auto-making proposal

Trump administration seeks to shake up Nafta talks with auto-making proposal

Trump administration seeks to shake up Nafta talks with auto-making proposal

10/06/2017

By Jacob M. Schlesinger and William Mauldin

Plan would change core principle of free-trade pact

WASHINGTON -- The Trump administration's chief trade negotiator plans to propose significant changes to a central aspect of the North American Free Trade Agreement, in a bid to force auto factories in Mexico to move back to the U.S., according to people briefed on the plan.

The proposal introduces a requirement that cars would need to have a specific level of U.S.-made content to qualify for tariff breaks, a step that would change a core principle of the 23-year-old regional trade pact and pit the longtime trade members against each other. Currently, cars can cross the continent's borders duty free if they have a specified amount of content from within the Nafta region, in keeping with the pact's original objective of creating a more integrated continental economy.

"This would be enormous," said Gary Hufbauer, a trade expert at the Peterson Institute for International Economics. "It's completely anathema to the concept of a free-trade agreement where the point is to have stuff made across the whole area."

Since negotiations with Mexico and Canada to rewrite Nafta began in mid-August, U.S. Trade Representative Robert Lighthizer has hinted in public statements that he was considering such a proposal to meet President Donald Trump's demand that a revised Nafta needs to curb the U.S. trade deficit with Mexico.

An expanded version of this report appears on WSJ.com (https://www.wsj.com/articles/trump-administration-seeks-to-jolt-nafta-talks-with-content-demands-1507255310?mod=mktw).

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