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US, Mexico NAFTA near deal on energy, autos, Canada still left out

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Trump Nieto Mexico
Donald
Trump and Mexico’s President Enrique Pena Nieto arrive for a
press conference at the Los Pinos residence in Mexico
City.

Reuters/Henry
Romero



  • The US and Mexico reached an agreement on parts of the
    North American Free Trade Agreement.
  • The deal will retool rules regarding auto manufacturing
    and energy.
  • Canada must agree to the new guidelines, and the trio
    must reach agreements on a handful of outstanding issues before
    they can reach a deal on a final NAFTA negotiation.

The US and Mexico reached an agreement on elements of the North
American Free Trade Agreement, or NAFTA, a move that represents a
significant step toward reshaping the landmark trade deal.

According to multiple reports, the two sides came to agreement on

key issues regarding automobiles
 and the treatment of
energy products.

Walking into negotiations on Monday, Mexico’s economy minister
Ildefonso Guajardo said a deal was close but there was “one more
important item.” A formal announcement could come as soon as
Monday.

Some of the issues that were negotiated:

  • A US push to increase the percentage of a car that had to be
    sourced from a NAFTA nation to move freely across the border of
    the three NAFTA nations. That percentage will be increased to 75%
    from the current 62.5%.
  • A threshold for the amount of the manufacturing process that
    must be performed auto workers making $16 an hour or more.
  • Mexican cars and trucks that do not meet the new rules will
    be assessed a 2.5% tariff.

Trump teased the deal in a Twitter post on Monday.

A big deal looking good with Mexico!” he
said
.

Trump longed pushed for the renegotiation of NAFTA,

saying the current deal
is the “worst trade deal in the
history of our country.”

Any agreement on these key elements would also need the
endorsement of Canada, the third member of the NAFTA bloc. Other
US demands still need to be resolved in trilateral talks, with a
sunset clause being the most contentious.

Jesus Seade, the representative for Mexican
President-elect Andres Manuel Lopez Obrador, told reporters
Saturday that the three sides could come together on some sort of
agreement on a sunset clause.

The US has demanded a sunset clause, which would require a
re-valuation of the deal every five years with the option to get
out, as part of the talks. Both Mexico and Canada strongly oppose
the idea because it would create economic uncertainty and allow
the US to unilaterally wreck NAFTA.

The compromise could come in the form of regular
evaluations of the agreement without the threat of
combustion.

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