NAFTA negotiations: Mexico faces uphill battle

Mexico City,, Nov 18 (IANS) Mexico faces daunting challenges in the fifth NAFTA renegotiation round, which got underway here amid fresh warnings from the US.

Just days before the talks scheduled to take place from November 17-21, US Commerce Secretary Wilbur Ross warned Mexico and Canada of the consequences of not reaching a new agreement, Efe news reported.

The dissolution of North American Free Trade Agreement (NAFTA) would be "far more damaging to them than to us", Ross said at the Wall Street Journal's CEO Council Meeting on Tuesday.

"I would certainly prefer them to come to their senses and make a sensible deal."

Mexican Economy Secretary Ildefonso Guajardo Villarreal responded a day later, recalling that many areas of the US with strong trade relations with Mexico would be adversely affected if the trade deal is scrapped.

Mexico's Business Coordinating Council President Juan Pablo Casta?on said that his coalition of business groups was hopeful that final agreement can be reached on important chapters such as financial services, energy and e-commerce.

But he acknowledged there were issues with no apparent "room to maneuver".

One thorny issue is the US' insistence that a larger share of manufactured products, particularly in the automobile sector, be made in North America to qualify for duty-free status.

In the case of automobile rules of origin, the US says it wants the North American content of cars to climb to 85 per cent (up from 62.5 per cent at present).

It also wants a new rule stating that cars manufactured in Canada and Mexico must have 50 per cent American content to qualify for zero tariffs.

The US also wants a new agreement to contain a "sunset" clause that would require each of the three parties to re-approve the deal every five years.