United States, Mexico Set to Unveil Two-way Deal on NAFTA

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In North America, the Trump administration prioritized one-on-one talks with Mexico, which produced a “handshake agreement” that was announced by President Trump on August 27. Canadian negotiators are in Washington, D.C. this week to rejoin the talks, with the hope of reaching a trilateral deal very soon. Both Mexico and Canada have insisted that any new deal must be negotiated among all three partners.

Because U.S. law requires a 90-day notice to Congress before any trade deals can be voted upon, President Trump needs to notify Congress of any new trade deal no later than September 1, if he wants to complete all action before a new Mexican president takes office on December 1.

Details of the agreement reached by the United States and Mexico are scant. However, we do know the new agreement would require 75% of auto content to be made in North America in order to qualify for duty-free treatment; NAFTA currently requires 62.5%. The new agreement also would require 70% of steel, glass, and aluminum used in imported autos to come from North America. Additionally, a substantial portion of each vehicle would be required to be manufactured in a “high wage factory.”

IPC is open to a NAFTA 2.0 and is working to secure stronger investor dispute-settlement protections. Over the summer, IPC has been participating in congressional advocacy with other industry associations, underscoring the importance of the North American electronics market and supply chain. We will continue to monitor developments closely and share information with IPC members and industry.