NAFTA Debate Over Local Content to Continue Between Sessions

NAFTA trade representatives have agreed to continue talks about local content rules for vehicles after the current round of official negotiations ends on Monday, sources tell Reuters.

Envoys doubt that the thorny issue of rules of origin will be resolved before the seventh round of talks about updating the North American Free Trade Agreement wraps up in Mexico City. An eighth round is expected to begin in Washington, D.C., in late March.

Canada, Mexico and the U.S. had been scheduled to resume debate on the subject Monday. But those talks were suspended after the U.S. envoy for that topic was called back to Washington.

The content question has been a giant hurdle since the negotiations began last August. The Trump administration demands that vehicles made in North America contain at least 85% local content (with 50% coming from the U.S.) to qualify for free trade among the three countries.

Carmakers claim those ratios would significantly disrupt their supply chains and undermine the value of having any NAFTA deal at all. The existing 24-year-old pact specifies 62.5% local content, which analysts say is already the highest percentage for any multinational trade pact.