NAFTA automotive negotiations on final lap, we hope

Although the U.S. government has agreed to reduce its proposed NAFTA requirements on automobile manufacturing content being made in North America (US, Canada, Mexico), many automakers are still scrutinizing the fine details of the 23-year old agreement.

Washington now wants 75% of the content of cars to be made in the region instead of 85% (currently 62.5%). It also wants 40% of manufacturing cost to derive from workers with wages of at least U$16/hr (for light-duty passenger vehicles) and 45% of the cost (for pickup trucks).

While essential parts (motor, engine, chassis, body) would need to follow the 75% rule, other stipulations are major auto parts (70%), steel and aluminum content (70%), and complementary parts (65%).

Currently, negotiations also show a two-year transition period for light-duty passenger vehicles and four-year transition for pickup trucks.

Canadian Prime Minister Justin Trudeau and Mexican President Enrique Peña Nieto discuss NAFTA alternatives (Source: AFP)

Automakers

Auto Alliance, a group of OEMs which make up approximately 70% of the world market, is still scrutinizing the final details of the proposal. However, a consensus between the three countries and the automakers are expected this month (May).

The American Automobile Policy Council (AAPC) – composed of GM, Ford, and FCA US -  has expressed that it appreciates the constructive dialogue.

Auto Alliance is made up of BMW, FCA, Ford, GM, Jaguar, Land Rover, Mazda, Mercedes Benz, Mitsubishi Motors, Porsche, Toyota, Volkswagen and Volvo.