While a U.S. proposal to increase tariffs on cars imported from Mexico that don’t meet stricter new content rules was a sticking point as recently as last week, that issue appeared to be resolved by Thursday.
The U.S. agreed to keep the 2.5 percent tariff currently applied under World Trade Organization rules if the cars are made at factories that already exist, according to two people familiar with the plans, who asked not to be named discussing private negotiations.
That would leave open the possibility that cars that don’t meet the rules and are built at new plants could face tariffs of 20 percent to 25 percent, pending the results of a Section 232 national security investigation that Trump ordered in May, the people said.
I'm puzzled by what exactly is being discussed here. With regard to autos that don't meet the new ROO requirements, is this a U.S. commitment to exclude Mexican auto imports that are based on existing production from any Section 232 auto tariffs? Is it a commitment by Mexico not to contest Section 232 auto tariffs on new production? Some mix of the two? Or something else entirely?
Whoever is drafting this should be thinking carefully about how the NAFTA language relates to WTO obligations. The Peru - Agricultural Products case illustrates potential difficulties with FTA/WTO interaction.
