Most Mexican auto exports can meet new NAFTA rules, minister says

August 28, 2018 03:20 CET

WASHINGTON — Most of Mexico’s auto exports should comply with new rules drawn up under the agreement struck between Mexico and the United States in the renegotiation of the North American Free Trade Agreement, Mexico’s economy minister said on Monday.

The minister, Ildefonso Guajardo, told reporters that close to 70 percent of Mexico’s auto exports were light vehicles, and were in a position to meet the new NAFTA rules of origin, which determine how much North American content autos must include.

“Today their numbers, and the way they have their business model would allow them to comply,” Guajardo said.

The United States and Mexico have agreed to raise to 75 percent the regional auto content threshold to qualify for duty free market access in the NAFTA region, up from the current level of 62.5 percent, a U.S. trade official said.

The agreement was part of the two neighbors’ deal on Monday to overhaul NAFTA, putting pressure on Canada to agree to the new terms on the auto trade and dispute settlement rules to remain part of the three-nation pact.

Guajardo said “at the moment” the new rules governing exports of such light vehicles would “kick in” from January 2020. Mexican officials did not confirm the date, although two industry sources said it was correct.

After 2020, there would be a gradual transition to the new rules through to 2023, he added.

Canada is due to rejoin the NAFTA discussions on Tuesday and has said it also wants to have its say on the new rules.

The minister also said that the revised trade agreement would maintain provisions from the original NAFTA accord which stated that new auto plants would for the first five years only need to meet a requirement of 50 percent regional content.

Pickup trucks, which also account for a significant proportion of Mexican auto exports, were a “very different animal,” Guajardo said. That section of the auto industry would require “additional efforts,” the minister added.

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