These Are Five Sticking Points to a New Nafta Deal

The clock is running on Nafta negotiations. Though trade among the U.S., Canada and Mexico has tripled since the North American Free Trade Agreement took effect in 1994, U.S. President Donald Trump blames the accord for a loss of U.S. manufacturing jobs and for trade deficits. Talks to update Nafta effectively began last August with a pair of objectives -- modernizing an aging agreement for new economies and rewriting it to appease Trump. With time running out to get a deal in time for this U.S. Congress to pass it, these are the major sticking points.

For Trump, Nafta is mostly about cars. Mexico has emerged as an auto-making powerhouse within Nafta, sending on average $4.3 billion of parts and $2.6 billion of finished vehicles each month to the U.S. over the last five years. Under current Nafta rules, at least 62.5 percent of a car needs to be sourced from the three countries in order for it to be traded tariff-free. U.S. negotiators are said to want to raise that to 75 percent (down from their initial proposal of 85 percent), though the details aren’t yet clear. The U.S. also wants to expand the “tracing list” of car parts whose origin is actually tracked. Canada and Mexico have warned that the U.S. proposals are too much, too fast, and that companies would simply abandon using Nafta -- and pay U.S. tariffs, which are relatively low -- rather than contort their supply chains.