Mexico Ready to Tackle NAFTA’s “Rules of Origin”

Mexico has signaled readiness to open discussions with the Trump administration on definitions governing tariffs on finished goods shipped between Canada, Mexico and the U.S. under the North American Free Trade Agreement, Reuters reports.

Trump has argued for tighter “rules or origin,” which apply to parts used to make finished goods within the NAFTA region. For example, Mexican-made vehicles that contain at least 62.5% content from North America may be shipped duty-free to the U.S. market.

Raising the local content target would make suppliers in North America more competitive than those in Europe or Asia. Sources tell Reuters that Mexico believes that agreeing to such adjustments could satisfy Trump’s “America First” objectives without wrecking the country’s economy and flourishing auto industry.

Mexico’s foreign minister and economy minister are scheduled to meet with Trump administration officials today and Thursday to discuss trade, security and migration issues. The delegation said on Monday its goal is to retain free access for Mexican products.

Wilbur Ross, Trump’s nominee for secretary of commerce, has indicated that rules of origin will be central to talks with Mexico and Canada about modifying the 23-year-old NAFTA agreement.