February 3, 2017 / 12:10 AM / 7 months ago

Mexico minister signals changes to rules of origin in NAFTA talks

Trucks wait in a long queue for border customs control to cross into the U.S. at the Otay border crossing in Tijuana, Mexico, February 2, 2017.Jorge Duenes

MEXICO CITY (Reuters) - Mexico, the United States and Canada could overhaul rules about a product's country of origin in a renegotiation of the NAFTA trade treaty in order to strengthen regional supply chains, the Mexican economy minister said on Thursday.

Mexican officials told Reuters last month the "rules of origin" in the North American Free Trade Agreement were likely to form a major part of talks to renegotiate the 1994 accord among the three countries.

Mexican Economy Minister Ildefonso Guajardo said following his initial discussions last week in Washington with U.S. President Donald Trump's trade adviser, Peter Navarro, that the U.S. position on how to revamp the treaty was becoming "very clear."

"They want to strengthen the value chains in North America and this means we'll have to conduct a very thorough review of the treaty's rules of origin," Guajardo told Mexican radio.

Trump on Thursday reiterated his concerns about NAFTA and said he would like to speed up talks to either renegotiate or replace the deal.

Trucks wait in a long queue for border customs control to cross into the U.S. at the Otay border crossing in Tijuana, Mexico, February 2, 2017.Jorge Duenes

Rules of origin set out where products are sourced from, and Mexican officials say that making them stricter could force companies in North America to use more regional content in support of Trump's plan to create more U.S. manufacturing jobs.

Some adjustments have been made to the NAFTA rules of origin in the past, and Mexicans familiar with ongoing discussions say the upcoming talks could tighten the rules in the auto sector, which has been a point of particular concern to Trump.

Guajardo also noted that it made sense to include labor and environmental rules in a renegotiated NAFTA, which he insisted would be a three-way discussion, in spite of worries that Trump could try to push for bilateral deals with Mexico and Canada.

Guajardo said he had discussed the point with Canadian Foreign Minister Chrystia Freeland and the country's natural resources minister, Jim Carr, who is visiting Mexico this week.

"Their position is that this a trilateral negotiation, and we will keep working in a trilateral framework," he said.

Mexico's government said on Wednesday it expected formal discussions on reworking NAFTA to begin after the start of May, following a 90-day consultation process with the private sector.

Reporting by Dave Graham; Editing by Peter Cooney

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