Mexico and US Talking About Tariff Rate for Non-Conforming Autos Under NAFTA

Mexico's Economy Minister Ildefonso Guajardo declined to say what Mexico's view is on the tariff rate for autos that do not qualify for a stricter rules of origin under NAFTA. Outside sources familiar with the talks say that the U.S. is asking that the tariff rate be higher than 2.5 percent for non-conforming autos (see 1808130019). "I will not discuss details, because as you know, this is a work in progress, and we have to make sure we have the final outcome -- we are still making an effort with that," Guajardo said in response to a question about the tariff treatment of non-conforming autos from International Trade Today.

Guajardo was speaking with reporters outside the Office of the U.S. Trade Representative on Aug. 15, as he began the fourth week of intensive talks aimed at reaching a conclusion to Mexico-U.S. bilateral issues by the end of August. "We don't know if it will be a successful conclusion. We are trying," he said. Other products, such as textiles, that are subject to rules of origin under NAFTA "are well, well advanced," he said. No more chapters have been closed since Guajardo said 20 chapters are done (see 1808030004).

Canada has been excluded from the talks, even as Guajardo -- and Congress -- insist NAFTA will be a trilateral trade agreement. A Canadian reporter asked Guajardo if dispute resolution has been discussed. Mexico is particularly concerned about preserving investor-state dispute resolution; Canada is particularly concerned about preserving Chapter 19, which is an enforcement mechanism in antidumping disputes. There is also a state-state dispute chapter, but that chapter has been eviscerated by the U.S.'s refusal to appoint a panel 18 years ago (see 1807230029). "We have been discussing all three dispute resolution chapters. We are talking about each one of them with a different approach," he said.

Mexico's foreign minister and President Donald Trump's son-in-law Jared Kushner have also been attending the meetings. Guajardo returned for both morning and afternoon meetings with U.S. Trade Representative Robert Lighthizer and will be back on Aug. 17. "It's a challenge to close everything pending," he said after the afternoon meeting on Aug. 16. "We are one step closer." Across the street at the White House, Trump said he wanted to make the right deal on NAFTA and asked Lighthizer for an update. "I’m in no rush," Trump said. "If we don’t have a breakthrough, don’t do the deal."