Auto manufacturers with plants in multiple states could raise resistance to the revamped model of the North American Free Trade policy stating that it will be unfair for the plants in the southern states.
Talks between the Mexican Economy Minister Ildefonso Guajardo and US trade that took place on Tuesday was aimed at resolving the remaining bilateral issues in order for Canada to return to the bargaining table after being sidelined for weeks.
Foreign automakers including Toyota Motor Corp, Volkswagen AG, Hyundai Motor Co conveyed their stand in an unreported letter dated August 11 towards top trade-focussed members of Congress.
The letter which was signed by President of the Association of Global Automakers John Bozzella stated that many of the companies would not be able to support revamped policies of the NAFTA without any further classifications, assurances and modifications. Experts suggest that companies with lesser reach in North America and fewer US research and development staff might find it difficult to meet the more stringent content requirement for years.
Additionally, the American Automotive Policy Council, which represents Detroit's Big Three (which includes General Motors, Ford and Fiat Chrysler) welcomed revised policies of the NAFTA. Matt Blunt who heads the trade group stated that the Big Three shared the administration's goals and that it would strengthen US auto manufacturing and create jobs.
The bilateral deal that will be finalised between the US and Mexico is expected to lift the need for American made parts in regionally made vehicles from the current 62.5 percent to 70 percent. Renegotiation of the 1994 pact of NAFTA was launched by US President Donald Trump a year ago. The revamped model, according to Trump is expected to bring manufacturing jobs back to the US.
Donald Trump has been focussing on the welfare of the US auto market by easing many of the rules that were considered stringent during Obama's administration. On August 3 the Trump administration proposed to roll back federal fuel efficiency requirement for passenger vehicles at the 2020 model year level of 35 mpg instead of letting them continue to rise through 2025 to nearly 50 mpg as planned by the Obama administration.
The proposal also suggested revoking the 1975 law that provides California with a waiver from federal rules allowing it to implement stringent standards compared to rest of the country. The draft rule which was jointly written by the United States Environment Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) includes a range of options for modifying the fleet fuel economy end emission standards. However, it also makes it clear that the preferences are to freeze the standards at the 2020 model year.
The new proposal, if implemented after a public comment period, would majorly weaken former President Barack Obama's far-reaching policy intended to reduce the amount of greenhouse gas emissions that contribute towards global warming.