by Eric Martin and Shery Ahn

The U.S., Canada and Mexico have general agreement on about 40% of the topics being negotiated in NAFTA talks, and Mexico may be able to accept an increase in the minimum regional content for vehicles traded under the deal, according to the nation’s ambassador to Washington. 

Geronimo Gutierrez said that like the U.S., Mexico is focused on reaching an agreement that strengthens employment. Still, he reiterated the government’s long-standing position that it will leave the negotiating table if President Donald Trump gives notice of his intention to withdraw the U.S. from the North American Free Trade Agreement.

"We have consensus on around 40% of the issues already," Gutierrez said in an interview Thursday with Bloomberg Television in Washington. Raising the requirement for cars built in North America from the current 62.5% regional content is "certainly a possibility, but on rules of origin we need to be very careful to make sure they’re looked at almost on a product-by-product basis." 

The U.S. demand for more North American, and specifically U.S. content in vehicles is among the most contentious issues on the NAFTA negotiating table, along with issues such as government procurement. Negotiators largely avoided these issues in the latest talks in Mexico City in November and Washington in December, setting up the meetings in Montreal next week as potentially decisive.

The talks in Canada are officially scheduled to run from Jan. 23 to Jan. 28, although on Thursday people familiar with the plans told Bloomberg News that they will be extended by one day to Jan. 29 for logistical reasons.

Mexico and Canada began negotiating with the U.S. in August at the initiative of Trump, who has repeatedly said the NAFTA accord led U.S. companies to fire workers and move factories to Mexico. Trump promises to negotiate a better deal for America or withdraw.

NAFTA requires a vehicle to have a minimum of North American content in order to benefit from tariff exemptions when made in Mexico and sold in the U.S. The U.S. has proposed raising the so-called auto rules of origin to 85% North American content and requiring a new 50% U.S. content minimum.

Mexico Economy Minister Ildefonso Guajardo said last week that negotiators are close to completing work on 10 of the 30 NAFTA chapters, including energy and telecommunications. The process for agreeing to dispute resolution mechanisms will be more difficult, he said. 

The 47-year-old Gutierrez, who became ambassador to the U.S. last year following Trump’s election, spent the previous half decade as managing director of the North America Development Bank based in San Antonio, Texas. He has also been a deputy foreign minister for Latin America and North America. He studied economics together with Foreign Minister Luis Videgaray at Mexico’s Autonomous Institute of Technology in the early 1990s. 

--With assistance from Ali Donaldson and Josh Wingrove.

To contact the reporters on this story: Eric Martin in Mexico City at [email protected]; Shery Ahn in Washington at [email protected]

To contact the editors responsible for this story: Vivianne Rodrigues at [email protected]

Robert Jameson

© 2018 Bloomberg L.P