Special Report: America first: the challenge for Mexico (ISSN 17414474)

The first round of the tripartite Canada-Mexico-US talks to renegotiate the North American Free Trade Agreement (NAFTA) were held in Washington from 16-20 August. Many questions about the overall renegotiation process remained unanswered. Robert Lighthizer, the US Special Trade Representative (USTR), took a tough line, claiming in his opening speech that in its 23-year history NAFTA had “fundamentally failed” and caused the loss of around 700,000 US jobs. Lighthizer said one of his government’s priorities was to increase the requirement for both North American and specific US local content in motor vehicles. Vehicle production and trade is one of the biggest value-added activities within NAFTA. At present, to qualify for free trade, vehicles must have 62.5% “North American content” – there are no requirements for specifically Canadian, Mexican, or US local content, and both Canada and Mexico would like to keep it that way. The US however is reported to be demanding its own local, US-made content rule to ensure that high-paid auto industry jobs remain in the country – a top political priority for the Trump administration. The US had an auto and auto-parts trade deficit of US$74bn with Mexico and US$5.6bn with Canada last year. Trump also wants to reduce his country’s overall trade deficit with Mexico.