As we have headlined numerous times in the last week, NAFTA talks between US and Mexico were nearing coimpletion and according to CNBC have now "concluded," with an announcement due today.
NEW: Mexican official says “we’ve concluded” talks with the US; announcement will come today.— Kayla Tausche (@kaylatausche) August 27, 2018
(US and Mexican negotiators will meet again at USTR this morning, likely to chart announcement details and next steps.)
MORE: Mexican official says deal should come “midday” — says US, Mexico have “reached understanding on key issues” and that Canada will now “re-engage” https://t.co/Ey7G2g9YiK— Kayla Tausche (@kaylatausche) August 27, 2018
This sparked buying pressure in US stocks and the Mexican Peso and dollar weakness.
The dollar is lower and gold rising on the reports.
As we noted previously, in recent weeks, the U.S. and Mexico had been focused on the thorny issue of car manufacturing amid a push by the Trump administration for a deal that would boost factory jobs in America. Specifically, the U.S. has proposed tightening regional content requirements for car production and having a certain percentage of a car manufactured by higher-paid workers.
And 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 according to Bloomberg sources.
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.
The latest breakthrough follows a report from the WSJ yesterday, according to which a key sticking point in the Nafta negotiations between the U.S., Mexico and Canada - namely Trump's desire to remove a provision known as investor-state dispute settlement, or ISDS, in which companies can bring claims to an international tribunal when they believe their overseas investments were unfairly treated by an action from another Nafta government - was on the verge of resolution.
On Saturday, Bloomberg also reported that the "thorny issue of rules for the energy industry seems to be resolved." The envoy from incoming Mexican leader Andres Manuel Lopez Obrador, Jesus Seade, arrived at a meeting with U.S. Trade Representative Robert Lighthizer saying the nations have resolved concerns that the deal had too many restrictions on how the next government can treat foreign oil companies investing in Mexico.
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While Trump has floated the idea of negotiating bilateral trade accords - finalizing one with Mexico before moving on to Canada - Bloomberg notes that both Mexico and Canada have said they want to keep a three-nation deal.