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Foreign carmakers object to Trump NAFTA plan

Foreign carmakers object to Trump NAFTA plan

Mubasher: Foreign brand auto manufacturers with US factories do not approve of the US administration rules to raise the amount of local content in North America-made cars, a group of firms told US legislators.

The stance of the carmakers, including Toyota, Volkswagen and Hyundai, was voiced in a previously unreported letter on 16 August from their ad-hoc “Here for America” group submitted to senior trade-focused members of Congress.

The letter could raise opposition to an overhauled North American Free Trade Agreement (NAFTA) from lawmakers in southern states, where foreign car makers’ auto plants were established.

“We remain concerned that, without further clarifications, assurances and modifications, many of those companies producing vehicles in multiple states will not be in a position to support legislation implementing a NAFTA 2.0,” the group said in the letter, signed by John Bozzella, president of the Association of Global Automakers.

The letter also expressed worries that the national security duties on vehicles and auto components, steel, and aluminium would curtail the benefit of a NAFTA agreement.

Some foreign brands with smaller foothold in North America and fewer US research and development (R&D) staff could face difficulty in fulfilling more strict content requirements for years, according to industry experts.

This came as discussions between Mexican Economy Minister Ildefonso Guajardo and US Trade Representative Robert Lighthizer are due to proceed on Tuesday in Washington in a bid to resolve remaining bilateral issues, while try to get Canada which has been sidelined for weeks from the talks, back to the negotiation table.

The US and Mexico are approaching a bilateral agreement on car manufacturing that would raise the requirement for North American content in domestically made vehicles to at least 70% from 62.5%.

The deal is set to demand 40% of the value come from high wage locations paying at least $16 per hour, a Mexican source familiar with the talks told Thomson Reuters.