As NAFTA negotiators from the United States and Mexico meet for a third straight week in a push to complete a deal on cars, they’re also preparing for a showdown over a clause sought by the Trump administration that could end the agreement altogether.
The nations are nearing an accord on content and salaries for auto manufacturing, and the issue remains their top focus, according to two people familiar with the talks.
But as teams become more optimistic that a cars deal can come together, attention is starting to pivot to the so-called sunset clause pushed by U.S. Trade Representative Robert Lighthizer — another make-or-break issue.
Unlike autos, where the United States and Mexico have been haggling for months and largely are down to tweaking details, neither side has been willing to make concessions on the sunset clause, which would end NAFTA automatically after five years unless the nations agree to continue it, according to the people, who asked not to be named discussing private conversations.
Mexico has maintained the mantra that nothing on NAFTA is resolved until everything is resolved.
The clause is considered radioactive by Mexico, Canada and business groups because it goes against a key objective of most free-trade deals.
Part of NAFTA’s original purpose was to provide certainty to companies making investments in manufacturing, including car production. An accord that casts doubt on future tariff levels and corporate protections raises immediate questions about the benefits of building a factory outside the United States.
“There are many pending issues, and we’re advancing in the grade of complexity,” Mexican Economy Minister Ildefonso Guajardo told reporters in Mexico City on Monday. “The sunset clause forms part of the most complex issues.”