The United States and Mexico are currently attempting to hash out an agreement on trade before Canada rejoins discussions on a renegotiated North American Free Trade Agreement (NAFTA).
But, autos have once again become a sticking point for both sides in the latest round of discussions. Previously, both sides were thought to have reached a common ground after reports of positive discussions from both the U.S. and Mexico. Reuters reported Thursday that rules of origin for automobiles and a U.S. proposed sunset clause have caused talks to sour somewhat.
Rules of origin regulations are meant to try and funnel more jobs back into the United States and the Trump administration still wants the ability to pose tariffs on Mexico over national security from new auto assembly plants. The threat of tariffs on cars from Mexico coming into the U.S. could hurt Mexico, and the proposal has caused friction in the latest round of talks. Canada has also said it will need to review and agree to any new rules of origin to also protect its manufacturing footprint.
The sunset clause has made for unpleasantries for both Canada and Mexico. The U.S. proposed the clause that calls for the ability to kill NAFTA in five years if all three countries don’t agree to sign on again.
The window to ratify a new NAFTA this year seems to have closed as all three countries continue to bounce proposals back and forth. Mid-term elections in the United States will also make it difficult for Congress to approve any new trade agreement.