Mexico says will not renegotiate NAFTA under pressure, but makes new offer

Thursday , President Enrique Pena Nieto’s spokesman said  Mexico will not buckle to pressure to conclude the long-stalled renegotiation of NAFTA, but a source said the country made a new offer after the United States launched a probe exploring auto tariffs.

Differences over how to reconfigure the auto industry have slowed progress on talks to rework the 23-year-old North American Free Trade Agreement that underpins Mexico’s economy, with Mexico showing some flexibility but refusing to completely meet U.S. demands.

Trump’s Administration said Wednesday it would examine whether car and truck imports from around the world harm its auto industry, a move that may lead to new tariffs on exports to the world’s second-largest auto market.

One Trump official said the investigation was partly aimed at yielding NAFTA concessions from trade partners Mexico and Canada.

Mexico said it won’t negotiate on the basis of pressure.

Mexico says any agreement much benefit Mexico.

Canadian Prime Minister Justin Trudeau on Thursday also said Washington was using the auto tariff probe as a negotiating tool. But  Mexico made a new offer on autos “showing some flexibility” on Thursday, following the U.S. announcement of the national security probe into car imports, a person familiar with the talks said. It was not immediately clear if the offer encompassed other areas under negotiation.

Mexico has in recent days responded to U.S. proposals with an offer that 20 percent of any auto made in North America would be produced in high-wage areas, a Mexican industry source briefed on the talks said. It was not immediately clear in what areas Mexico had shown further flexibility on Thursday.

The United States wants 40 percent of auto content to come from areas paying at least $16 hour.

Mexico has also proposed that 70 percent of overall content of a vehicle made in North America come from the region, countering a U.S. proposal of 75 percent for high-value parts.

Trump ordered the renegotiation of NAFTA to meet a campaign promise to bring more manufacturing jobs to the United States. The nine-month long talks are now bogged down by differences over auto production.

Once again courting voters in the U.S. industrial heartland, this time ahead of mid-term elections later this year, Trump says NAFTA has killed U.S. jobs and has threatened to scrap the deal.